Accounting system
Accounting System is a methodical procedure for identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm's assets, liabilities and owners' equity.
Overview[edit | edit source]
An accounting system is a collection of processes, procedures and controls designed to collect, record, classify and summarize financial data for interpretation and management decision-making. It combines the methodologies, personnel, and systems used by an organization to track finances and business transactions.
Types of Accounting Systems[edit | edit source]
There are several types of accounting systems, including a manual accounting system, an automated accounting system, a computerized accounting system, and a cloud-based accounting system.
Manual Accounting System[edit | edit source]
A manual accounting system requires the acting accountant or bookkeeper to post business transactions to the general ledger and the various journals manually.
Automated Accounting System[edit | edit source]
An automated accounting system uses accounting software to record and store financial data, making the accounting process simpler and more straightforward.
Computerized Accounting System[edit | edit source]
A computerized accounting system is a software program that is stored on a company's computer, network server, or remotely accessed via the Internet, and it can be a great benefit for a business.
Cloud-based Accounting System[edit | edit source]
A cloud-based accounting system is hosted on the vendor's servers and can be accessed through a web browser. It's an increasingly popular option due to its scalability and affordability for small to medium-sized businesses.
Benefits of Accounting Systems[edit | edit source]
Accounting systems offer a range of benefits, such as improved financial management, compliance with tax obligations, and enhanced business decision making. They also provide a clear picture of the business's financial health, which can aid in securing investment.
See Also[edit | edit source]
References[edit | edit source]
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