Paper Based Accounting System

Every accounting entry is based on a business transaction which is usually evidenced by a business document such as a check or a sales invoice.

Paper based accounting system. If a system is entirely manual it would require the following. Accounting systems don t need to be complicated and many small businesses do well with a manual system. The study also reveals that companies who make the switch to e invoicing can normally expect a payback period of 6. Manual accounting information systems are used mostly by very small businesses and home based businesses.

Some people are not comfortable working with computers and perform better with the paper and pencil system. Source documents general ledger general journal and special journals or subsidiary journals you might need. Paper and pencil used to be the way accounting was done before the advent of computers. Computer based systems require a fractional amount of physical space as compared to the books of accounts in the form of journals ledgers and accounting registers.

Paper based systems for managing documents and information is expensive because the company must allocate financial resources for both the cost of the materials and the labor power of managing them including printing collating and filing costs. The manual system works even if electricity is off unlike most computer setups. Vii storage and retrieval. A paper based accounting system can cost less in the early stages particularly if you are skilled with accounting and able to set up the basic system yourself with minimal help from a professional.

A journal is a place to record the transactions of a business. In a digital format the information is readily available to run all types of financial reports and a financial manager could produce a cash flow statement within a few minutes. The computer based accounting system ensures better use of time and resources. That typically electronic and automated invoice processes can result in savings of 60 80 compared to traditional paper based processing.

For most industries a paper based system is costly and insecure. The manual process can be tedious and prone to errors but it is simple and inexpensive making it a perfectly good choice. An accounting system can be represented by the following graphic which is explained below.