Computerized vs Manual Accounting PDF

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COMPARATIVE STUDY BETWEEN MANUAL ANDCOMPUTERIZED ACCOUNTING TO SELECTED MONEYEXCHANGE BUSINESS IN MANILAA Qualitative Research Presented to Mr. Ammar Torrevillas Pamantasan ng Lungsod ng Maynila Intramuros, ManilaIn Partial Fulfillment of the Requirements for the Subject Purposive CommunicationByAsu...

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COMPARATIVE STUDY BETWEEN MANUAL AND COMPUTERIZED ACCOUNTING TO SELECTED MONEY EXCHANGE BUSINESS IN MANILA

A Qualitative Research Presented to Mr. Ammar Torrevillas Pamantasan ng Lungsod ng Maynila Intramuros, Manila

In Partial Fulfillment of the Requirements for the Subject Purposive Communication

By

Asusano, Janna L. Bulatao, Marie Hazel Y. Libiran, Shaina Jane D.C. (S.Y. 2019 - 2020) TABLE OF CONTENTS i

Title Page.............................................................................................................................i Abstract..............................................................................................................................iv

Chapter 1: The Problem and its Background Introduction.........................................................................................................................1 Statement of the Problem....................................................................................................3 Theoretical Framework.......................................................................................................3 Conceptual Framework.......................................................................................................4 Assumption/Hyphothesis....................................................................................................5 Scope and Limitations of the Study....................................................................................6 Significance of the Study....................................................................................................7 Definition of Terms.............................................................................................................9

Chapter 2: Review of Literature and Studies Definition of Accounting..................................................................................................11 Accounting System...........................................................................................................11 Manual vs. Computerized Accounting System.................................................................13 Advantages of Manual Accounting System......................................................................16 Disadvantages of Manual Accounting System.................................................................17 Advantages of Computerized Accounting System...........................................................18 Disadvantages of Computerized Accounting System.......................................................20 Money Exchange Business in Manila...............................................................................21 Synthesis..........................................................................................….............................24 ii

Chapter 3: Methodology Research Design................................................................................................................25 Generation Method...........................................................................................................26 Population.........................................................................................................................26 Sampling...........................................................................................................................27 Instrumentation….............................................................................................................27 Ethical Consideration........................................................................................................29

References........................................................................................................................31

Appendices Appendix A: Letter of Permit...........................................................................................39 Appendix B: Letter to Respondents..................................................................................41 Appendix C: Interview Questions.....................................................................................42

Curriculum Vitae............................................................................................................43

ABSTRACT

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The accounting system must have to be efficient, effective to be able to create accurate financial information for the internal and external users and for decision making. This research investigated the comparison between the effectiveness of manual and computerized accounting system used in businesses, particularly on money exchange businesses in Manila. This study analyzed the effectiveness, efficiency and reliability of the manual and computerized accounting system. Since financial information and report are important in operating a business, the researchers aim to spread knowledge and information on accounting systems for businesses through this study. The researchers conducted interviews with the 20 selected accountants or employees about their insights and experiences in engaging with the manual or computerized accounting system. As a result of this study, researchers were able to attain information on the advantages and disadvantages of the accounting systems and how effective and efficient is the manual or computerized accounting system in formulating accurate financial information and better decision- making. From this, the researchers were able to identify which accounting system is best to be used in running a business. The findings of the study indicated money exchange businesses use both manual and computerized accounting system, although computerized accounting system usage was more than the manual accounting system. Therefore, the computerized accounting system was the preferred accounting system for calculating financial information. Keywords: Accounting System, Moiney Exchange, Manual Accounting System, Computerized Accounting System

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CHAPTER 1 PROBLEM AND ITS BACKGROUND Introduction The purpose of accounting is to provide financial information to the stakeholders of the business, management, investors and creditors. Accounting measures and summarizes the activities of the company and communicates the results to management and other interested parties. Managers need accurate and timely financial data to make intelligent decisions, and accountants are the ones who produce this information. While the accounting process collects the data and presents it in various types of reports, the accountants help interpret the meanings of the reports and suggest ways to use these details to solve business problems (Woodruff, 2018) .If a business doesn’t have an effective accounting system in place, it will put the business at risk of making serious errors in its finances. Furthermore, a good accounting system simply makes life easier and allows the owner to focus more on a growing business (WK Wilton & Associates, 2017). A good accounting system helps in tracking the day-to-day expenses and assess the company’s financial performance. Business accounting systems could either be manual or computerized. Manual accounting is time consuming and involves more paperwork, those who use it need to prepare financial statement reports, calculate trial balances, record transactions in physical registers and so on. Since everything is done manually, there is a higher risk of human error. Computerized systems, on the other hand, record financial transactions electronically and

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can streamline the operations of the business. Users can choose to view data in different formats, store it in the cloud and access it on the go (Picincu, 2019). Technology plays a vital role in managing a business, its rapid advancement has resulted in a big change in how the world works. It has important effects on business operations and it has completely changed the way business is done today. There may be a high advantage in using technology in a business, but, there are still possibilities that it creates an error. This research will be able to discuss about the advantages and disadvantages of using manual and computerized accounting system as well as to suggest what kind of accounting would be effective and efficient to use in a business specifically in money exchange businesses. The researchers have been inspired to conduct this study because it would be a great guide as aspiring certified public accountants as to how the significant information in a business should be handled and managed and specifically finding out what accounting system would be much efficient and effective in handling financial accounting information. Also, the researchers intended to have a broader knowledge if manual accounting in business firms specifically in money exchange business is still used up to this day where technology has its advancements. The findings of this research could provide relevant information and insights for money exchange businesses and other businesses on choosing the best accounting system that could be applied in organizing the financial statements and other important files of an enterprise

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Statement of the Problem: The study aims to know the more effective accounting system (Manual or Computerized) used in acquiring accurate financial information in the money exchange business. Specifically, it seeks to answer the following questions: 1.

What are the pros and cons of using the Manual Accounting System?

2.

What are the pros and cons of using Computerized Accounting System?

3.

What accounting system is more efficient and effective in calculating reliable and accurate financial information?

Theoretical Framework This study rests on the following theoretical framework. The Diffusion of Innovation Theory (DOI) seeks “to explain how and why new ideas and practices are adopted, with timelines potentially spread out over long periods” (Halton, 2019). It is a hypothesis outlining how new technologies and other advancements spread throughout societies and cultures, from introduction to

the wide-adoption. The theory was

developed by Rogers, who believes that an innovation has two parts. The First is “the generation of an idea or invention” and the second is “the conversion of the new idea or invention into a business or other useful application”. Rogers indicated the “reaction to it” or referring to the innovation and the innovation may be conveyed in terms of “knowledge, persuasion, or a decision to adopt” (Halton, 2019). For instance, the sending of new enterprise systems once in a while implies that the systems themselves

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are an advancement due to the fact that the new systems might be supplanting an obsolete system. Others defined adoption something a person does differently than what they had previously (LaMorte, 2019). It is also stated the factors that affect the rate of innovation diffusion include the mix of rural to urban population within a society. Adoption rate is the rate at which the individuals in a society accept a new innovation. For example, a society may have adopted the internet quicker than it adopted the vehicle because of cost, openness and familiarity with technological change. This theory has been used successfully in many fields, including communication, agriculture, public health, criminal justice, social work, and marketing (LaMorte, 2019). Moreover, Rogers considers diffusion of innovation as the process by which an advancement or innovation is conveyed through certain channels over time, among the individuals of a social system and that diffusion is a special type of communication concerns with a spread of messages that are seen as new ideas, objects or practices and that is the computerized accounting system. Conceptual Framework The conceptual framework will revolve around the subsequent diagram:

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Figure 1: Conceptual Framework The input will be the data concerning which accounting system does money exchange business are using and how effective (pros and cons) it is in obtaining their accurate financial information. The process that we will use in order to gather sufficient data if using both, manual or computerized accounting system is efficient and effective in terms of reliability and accuracy of businesses’ financial information is through survey questionnaire and interview. The technique of the data analysis can see what type of accounting system will be beneficial to money exchange business.

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Assumption/Hypothesis There are two accounting systems that every business was recommended to have for them to accurately report its financial information that could help with their policy implementations and decision-making: Manual and Computerized system. The Manual accounting may seem a thing in the past and outdated yet it proves that many accounting software today will recreate the feature of the manual one. Meanwhile, a computerized accounting has made the advancement over the years and made the life of the owners easier. Additionally, many businesses use both manual and computerized accounting to track their expenditures and income as they believe that using both accounting system is advantageous than using only one in acquiring reliability and accuracy of financial information. Thus, businesses, especially money exchange or money changer, should implement both these accounting systems to ensure the reliability and accuracy of their financial information. Scope and Limitations of the Study The study will specifically focus on the comparison between manual and computerized accounting system and which is more effective, efficient and reliable in operating a business. This study is limited to money exchange businesses in Manila that have experienced using either manual or computerized accounting system. One of the important factors that the researchers will be considered before conducting this research interview is the Principle of Respect for Human Rights and Dignity from the Code of Ethics. Also, the researchers considered the respondents’ time, for them to answer the interview questions carefully without being rushed. Moreover, it is for the researchers to 6

gather data which are more accurate and will be helpful for the research. The researchers conducted the interview in different respective days, giving considerations to respondents’ free time. Some people know that the accounting system is essential in every business. This research will emphasize the advantages and disadvantages of manual and computerized accounting system and if these are effective and efficient to use in the business. These are the limitations that allow the researchers to be able to focus more in depth of data and information. This study will only focus on the information based on the responses of the selected participants specifically the money exchange businesses in Manila regarding their experiences and insights about their use of accounting systems. Through this, it will be better for the researchers to gather the proper and the most accurate data for the research. Significance of the Study This study focuses on the comparison of Manual and Computerized accounting system of money exchange businesses in Manila. Therefore, it is significant for the following:



Money exchange business owners It is significant to the money exchange business owners, particularly in Manila

because it talks about the accounting system used in the business which is important for accurate financial information and better decision- making. This research can help them to know the advantages and disadvantages of the manual and computerized accounting system that will help their business to be progressive. Moreover, the study can help them 7

to analyze which is effective and efficient in calculating financial information and reliable for the external users.

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Business owners This study will help the other business owners because they can be also guided on

which accounting system is effective and efficient to be used in their businesses considering the advantages and disadvantages that are included in this research. 

Accountants This research will help the accountants to know the better accounting system to

use, especially they are responsible in gathering and calculating the financial information. It will also give them knowledge to the advantages and disadvantages of manual and computerized accounting system. In addition, it will help them to decide which of the accounting system is better in accomplishing financial reports for the internal and external users.



Aspiring business owners The study will be helpful to those who want to start putting up a business for the

reason that it will serve as a guide for them to be aware about the advantages and disadvantages of a manual and computerized accounting system that they should consider for an accurate financial information which is important to a business.



Future studies This study will be advantageous to the future studies. Specifically, this

can be employed for referencing purposes regarding to the effective accounting system in

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acquiring reliable and accurate financial information that can be applied in any business or organization. Definition of Terms 1. Accounting system System used to manage the income, expenses, and other financial activities of a business An accounting system allows a business to keep track of all types of financial transactions, including purchases (expenses), sales (invoices and income), liabilities (funding, accounts payable), etc. and is capable of generating comprehensive statistical reports that provide management or interested parties with a clear set of data to aid in the decision-making process (Debitoor's Accounting Dictionary).

2. Money exchange business A business that has the legal right to exchange one currency for another to its customers. It operates such transactions that can be found in a variety of forms and venues. It may be a stand-alone, small business operating out of a single office, or it may be a larger chain of small exchange-service booths at airports, or it may be a large international bank offering currency exchange services at its teller stations (Investopedia, 2019).

3. Internal users It refers to the members of a company's management and other individuals who use financial information on running and managing the business. They work within the company and make decisions for the business. Examples of internal users are owners, managers and employees (AccountingVerse).

4. External users

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A person outside of an organization who does not directly run its operations and uses financial or accounting information about that company to make decisions. In other words, it’s someone who doesn’t manage or work for a company, but uses its financial information. Examples of external users are the stockholders, the public and the government (MyAccountingCourse Dictionary).

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CHAPTER 2 REVIEW OF LITERATURE AND STUDIES This chapter will provide information on manual and computerized accounting system such as its differences, advantages, disadvantages and preferences of the businesses from other sources. Definition of Accounting Accounting is the language of the business, thus it has an important role in the failure or success of a business organization. An organization must keep track all financial information that identifies with its business activities. The modern accounting was founded by Luca Pacioli in approximately 500 years ago (deSantis, 2013). This system was executed and became the basis and that even current accounting principles are based on it. Victoria (2017) stated that every company practices accounting because it is generally accepted that companies have to unveil ce...