Comparison of the Accounting Cycle in a Computerized and Manual

System

Steps in the Accounting

Manual System

Computerized System

1. Analyze the source

Manual

Manual

documents
2. Record transactions in

Manual

Manual Data Entry includes

journal
3. Post to the ledger
4. Preparing unadjusted trial

Manual
Manual

manual electronic coding

Automatic
Automatic

balance
5. Preparing the adjusting

Manual

Automatic

entries
6. Preparing the

Manual

Automatic

Financial Statements
7. Preparing the Closing

Manual

Automatic

Entries
8. Preparing the Post

Manual

Automatic

closing Trial Balance

9. Preparing the

Manual

Automatic

Cycle

Reversing Entries

Differences between Electronic Data Processing (EDP) and Manual

Processing

Points of Difference

Discussion

1. Transaction (Audit) Trail

Only in computer-readable form

2. Uniform Processing

Uniformly subjects like transactions to the

same processing system

3. Segregation of functions

Combines functions which are performed by

several people in a manual system.

4. Visibility of information

Records and files may not be printed and

cannot be read without using information

5.Unauthorized access

Unauthorized access without visible evidence

is greater than in manual system

6. Transaction initiation/execution by

certain transactions may be initiated by

computer

computer

7. Systems changes

More difficult to implement than in manual

systems

8.Potential for increased management

Provide effective means of supervising and

supervision

reviewing company operations

9. Dependence of other controls on

Produce reports that are used in performing

computer processing controls

manual control procedures