Computerized Accounting

Janelle Maloney

Professor M. Kennedy

AC 162-31

Sunday November 17, 2017

Computerized Accounting

An accounting cycle is a 9-step process which is a procedure of collecting, processing and the communication of financial information. The first step is to prepare a worksheet. A worksheet contains all transactions that are analyzed to conclude the accounts that are affected along with the amounts that are to be recorded. The next step in the accounting cycle is the recording in the journals. The journals are recording entries that contain two accounts, debit and credit. Journal transaction entries are always recorded in the order that they occur. Posting to ledger accounts is the third step. In this step, the balance of accounts can now be determined. The fourth step in the accounting cycle is to prepare a trail balance, the checks whether the debit and credit accounts are equal. Journalizing and post adjusting entries will be the fifth step. These entries are made so the accounts can be updated before they are finalized in the financial statements. The sixth step in the accounting cycle would be to prepare an adjusted trial balance sheet. This is to ensure that the debit and credit accounts are balanced after entering the adjusting entries. Step seven in the accounting cycle is the preparation of the financial statements. A financial statement is comprised of an income statement, owner’s equity statement and a balance sheet. The second to last step is the journalizing and closing entries. The final step in the accounting cycle is the post-closing trial balance, which shows the balance of the debit and credit accounts after the closing entries are made.

A computerized system such as QuickBooks can ensure an efficient and effective report of financial information. A computerized accounting system can do most of the accounting cycle steps automatically with little to no errors unlike human accounting. Another added benefit is that data is usually only entered once in the computerized system. With computerized accounting one will be able to get the most up to date information timelier which ultimately can lead to better business decisions being made. For companies that are remote or have employees that travel, computerized accounting is something that will greatly benefit them. For example, employees and employers will have access to sensitive information at all times and from any location. In the event that a company gets audited it will be very easy for them to pull up any financial documents, unlike manual auditing which can take several weeks to complete.