No products in the cart.
A COMPARATIVE ANALYSIS OF A COMPUTERIZED ACCOUNTING SYSTEM AND MANUAL ACCOUNTING SYSTEM
Roll over image to zoom in
Click to open expanded view
THIS RESEARCH WORK IS ON A COMPARATIVE ANALYSIS OF A COMPUTERIZED ACCOUNTING SYSTEM AND MANUAL ACCOUNTING SYSTEM. INTRODUCTION 1.1 BACKGROUND OF THE STUDY Accounting system according to an Italian monk, Luca Pacioli (1491), is the combination of personnel records and procedures that a business uses to meet its need for financial data. Financial accounting also encompasses the summary of information and presentation of periodic reports such as profit and loss statement and balance sheet. The historical firms of accounting were of different degree of sophistication according to the need and techniques of the time. This is why modern accounting is based on the double entry system and the recognition of the dual nature of each transaction and this gives a co-ordinate support for the control of all the transaction of a business. Accounting system according to business dictionary is an organized set of manual and computerized accounting methods, procedures and controls established to gather, record, classify, analyze, summarize, interpret and present accurate and timely financial data for management decisions. In spite of this, there are policies for reporting on an organization performance and current conditions. These policies increase the usefulness of report including their reliability and comparability. The policy that makes up acceptable accounting practices are determined by many individuals and groups and those policies are referred to as generally accepted accounting principles (GAAP). Since accounting is a service activity, these rules reflect our society’s needs and not only on those of accountants. The financial Accounting standard Board (FASB) is another body or group that is seen as an independent group of seven full-time members with a large staff. This body has issued six statements of accounting concepts which help in guiding accounting standard setting. Many companies and organizations involve themselves in setting accounting rules/policies. They include investors, government agencies, politicians, unions, lenders and other business and non-business organizations. Furthermore, there are two major types of methods used in recording accounting information, such methods are manual accounting system and software accounting system or computerized accounting system. Manual accounting system extends and includes the method of processing, recording, journalizing transactions posting to the ledgers and preparing the financial statements which provide decision makers with useful information in making decisions. These decisions relate to the allocation and use of scarce economic resources such as money, land, labour and capital. These manual accounting systems are wholly used for preparing income tax returns, reports to managers, bills to customers and other forms of providing accounting information. In addition, with manual accounting system, accountants and managers usually inspect the documents, journal ledgers and reports in the performance of testing and verification. Transaction can be traced from source documents to journals, general ledgers, printed report etc. Subsidiary ledgers can be posted and the total can be compared with control accounts. It is visually observed by the auditors or accountants to determine whether proper books of accounts or is being followed. Technology is a main part of our modern society and business practices. It also plays a major important in accounting as it help in reducing the time, effort and cost of record keeping while improving clerical accuracy. Technology has distinct the way we store, process and summarize large masses of data which makes accounting free to increase its field. The origin of software could be dated back to early 1960s. Historically, emphasis in computer industry was on programming and was seen as the biggest single problem in the implementation of a computer system. Computer has the ability to add and subtract, but frequently not to multiply or divide, the computer run with relatively simple software routines. However, this study tends to analyze the comparison between manual accounting and software accounting which are the two types of accounting system used by various organizations and companies. 1.2 STATEMENT OF THE PROBLEM In recent times, most companies and organizations have been using the manual form of operations in their accounting systems. Primarily, this manual accounting systems used to meet the organizational information requirement but this has been on consistent failure in recent times as a result of growth and diversification of business and technological advancement complexities in information technology to meet the current business demands. Thus, companies and organizations had usually been faced with a number of problems in the use of this manual accounting system which involve lack of ability to handle sufficient volume of data in terms of speed and accuracy, insufficient data storage and retrieval system often resulting in loss of vital records, incorporating final updates, rampant report of frauds and forgeries in the use of the system, unseemliness of information which implies that information needed for effective decision making . This is repeatedly, as a result of poor retrieval and inability to collect large volume of data within the required time. All these problems include consequence in great loss of scarce resources and impeded organization growth, steadiness and advancement. Hence, in attendance to affect these problems related with the manual accounting system and substitute it with the development of an integrated accounting software system where financial and non-financial accounting transaction are recorded, analyzed, retrieved, reported, interpreted, summarized and processed. 1.3 OBJECTIVE OF THE STUDY The main objective of this study is a comparative analysis of software accounting system and manual accounting system. The study aims at ascertaining the following objectives: 1. To evaluate whether frauds and forgeries are encourage in computerized accounting system i.e. software accounting system than the manual accounting system. 2. To examine whether software accounting system can handle large volume of data than the manual accounting system. 3. To study whether the use of software accounting system increases effectiveness and efficiency in organizations or companies than manual accounting system in reducing the amount of funds lost through frauds and forgeries. 4. To examine whether software accounting system is capable of storing, retrieving, analyzing, processing, summarizing and reporting rapidly than manual accounting system. 5. To show the operational and reporting system in both the manual accounting system and software accounting system. 1.4 RESEARCH QUESTION The course of this research has picked up some interesting enquires and discussions which centered more on a comparative analysis of software accounting and manual accounting system in two companies Nigeria Breweries Plc. and Africa Petroleum Plc in Enugu State. The following questions are put forward for the purpose of the study: i. What are the measures taken to ascertain the extent to which fraud and forgery can be prevented and controlled using either of the accounting system? ii. Can software accounting system handle large volume of data more than the manual accounting system? iii. How effective and efficient is the use of software accounting system or manual accounting system? 1.5 RESEARCH HYPOTHESES Here the following hypotheses were formulated, tested and validated in the study. Hypothesis One H0: frauds and forgeries are not encouraged with the use of software accounting system than manual accounting system. H1: frauds and forgeries are encouraged with the use of software accounting system than manual accounting system. Hypothesis Two H0: Software accounting system is not able to handle large volume of data than the manual accounting system. H1: Software accounting system is able to handle large volume data than the manual accounting system. Hypothesis Three H0: Manual accounting system is not effective and efficient than the software accounting system in reducing the amount of funds lost frauds and forgeries. H1: Manual accounting system is more effective and efficient than the software accounting system in reducing the amount of fund lost through frauds and forgeries. 1.6 SIGNIFICANCE OF THE STUDY This study has a lot of significance to the educational system and industrial environments. 1. It impart hold knowledge to the general public who may not have the opportunity of reading some relevant test on software accounting system as well as manual accounting system. 2. It creates new initiative in information expertise sub-sector. 3. Non-computer experts with little or no assistance will be exposed and encourage through this study. 4. It provides important literature for other researchers. 5. It will promote productivity, efficiency and effectiveness in industries since users satisfaction is assured as well as error free and speeding reporting system. 1.7 SCOPE OF THE STUDY The coverage of this study is limited to the study of a comparative analysis of software accounting system and manual accounting system of which particular attention is given using two companies in Enugu as study. These companies are Nigeria breweries PLC (Enugu), African Petroleum PLC (Enugu). 1.8 COMPANIES PROFILE NIGERIA BREWERIES PLC Nigeria Breweries Plc. was incorporated on November 6th, 1996 as Nigeria Breweries limited and was first commissioned in Lagos on 2nd June 1949, while other branches were established such as Aba branch in 1957, Kaduna 1963, Ibadan in 1982 and Enugu in 1995. AFRICAN PETROLEUM PLC The history of African petroleum Plc. dates back to 1945 when the British petroleum company limited bought up the assets of the Atlantic Refining Company on the West Africa coast. In1964, AP Nigerian limited was incorporated in Nigeria. As an associate of the world wide AP group, it marketed petroleum throughout the federal Republic of Nigeria. In 1973, the company changed from a private company to public company, when 40% of its shares were sold to Nigerian citizens in compliance with provisions of Nigerian Enterprises promotion decree of 1977. 1.9 LIMITATION OF THE STUDY There is no research work or study that is entirely hitch-free. During the course of this study, a lot of problems prompted up. The main limitation of this research work is time factor. The researcher had limited time with which he used in completing the study. This also created a room for other problems and made data collection a difficult task. The problem of finance cannot be ruled out any research work of this entails typing, photocopying, transportation etc. The unavailability of material with which to work with constituted the limitation of the research work. The study is however limited to these companies. Nigeria Breweries Plc. 9th mile Enugu metropolis, African Petroleum Plc. Presidential road, Enugu. As well as the following financial areas: Such as general ledger, account payable, account receivable, purchasing, inventory control and cash resources. The research will also provide overall information on software such as peach tree accounting system for windows implementation procedures involved. 1.10 DEFINITION OF TERMS SYSTEM: It is an interrelated or interacting element organized into a complex whole. A system is a group of interrelated components working together towards a common goal by accepting inputs and producing outputs in an organized transformation process. SOFTWARE: It is a general term for the various kinds of programs used to operate computers and related devices. Software is the programs and symbolic languages that control the function of the hardware. MANUAL ACCOUNTING SYSTEM: These are those system in which source document are posted by hands which extends and includes method of processing, recording, journalizing transactions posting to the ledgers, sales, cash receipt and other type of journals. ACCOUNTING SYSTEM: It is an organized set of manual and computerized accounting methods, procedures and controls established to gather, record, classify, analyze, summarize, interpret and present accurate and timely financial data for management decisions. ACCOUNTING: It is a system for recording; classifying, measuring, interpreting financial data for an organization to enable users make assessment and decision making. COMPUTERIZED ACCOUNTING: It is what businesses used to track their financial information. COMPUTERIZED ACCOUNTING SYSTEM: It is a system used by business for recording their financial information. Every time a transaction happens, an entry is made into the system.