Accountinging Systems: The Advantages Of Accounting Systems
1235 Words5 Pages
The benefits of small businesses using accounting systems are efficiency, increase cash flow, more accurate records and reduced fraudulent activity.
As stated in the Journal of Accountancy “Data integrity and speed improve as manual processes such as spreadsheets are replaced with automation. While spreadsheets are a useful tool they can be prone to errors and have no means to track changes made to them.” Journal of Accountancy. Increased efficiency and reduced human error are two significant advantages to using an accounting system. Redundant entries are reduced significantly in many areas of the accounting cycle when an accounting system is put into place. An inventory spreadsheet can be a good tool but can also be very time consuming,…show more content… Accounting software has programmed checks and balances in place to help ensure fraudulent activities do not occur such as audit reports. An audit trail in the software is a record of everything that is done in the program. It allows the users to see whom was the last user to alter transaction. This could identify the person committing the fraud. Software also has a system of checks and balances in place. Many accountants using QuickBooks don’t know that there is a function to set a closing date and still be able to view the closed data. This function will restrict and protect the data prior to that closing date by use of a unique closing date password. Anytime a user attempts to make a change in the close periods, a prompt will appear for a password prior to saving the entry. Therefore, no entry can be made during that period without your permission or knowledge. Implementing the use of this function is very simple and it can help avoid numerous errors. www.hhcpa.com/blogs/government/closing-and-locking-a-period-in-quickbooks. When a transaction is altered in a previous bank reconciliation the Reconciliation Discrepancy report in QuickBooks allows the person doing the bank reconciliation know what was altered and when. If that same bank reconciliation was done by hand or in an excel spreadsheet the change may take hours to find or may not have even been noticed if it was something as small as a check number or check date being changed. Something as small as the date on the check impacts multiple accounts on the financial