A manual accounting system is a way of keeping business financial records with a written ledger of transactions. Computers and software are not used as part of a manual system.Continue Reading
While most modern businesses use computerized accounting packages, some firms still prefer a manual system. A manual system costs less because there is no expense for computer equipment, software and employee training. A manual system can be more secure because it does not use the Internet to transfer data to accountants or the IRS.
A disadvantage of a manual accounting system is that it is prone to mistakes, with no software in use to confirm calculations. Generating financial reports takes more time and effort, and paper records with no backup are more prone to destruction by fire or flood. Preparing tax returns takes longer when using a manual system. In the event of an audit, a manual system requires more man hours spent on gathering requested documentation.
Manual systems work best for smaller businesses and don't work well in companies with large numbers of financial transactions. Using paper requires that the bookkeeper be more knowledgeable in basic accounting principles than is necessary for an employee using accounting software. This makes it more challenging to find suitable employees to keep books, as fewer companies use manual accounting and more use computerized systems.Learn more about Accounting
A post-closing trial balance is a listing of general ledger account balances after the closing entries for an accounting period have been entered, according to Accounting Coach. This listing includes only balance sheet accounts. Income accounts are not listed because they are closed for that accounting period.Full Answer >
"Miscellaneous expense" is a general ledger account used for small expenses not recorded in other accounts, according to the accounting dictionary on Simplestudies. Accounting Coach notes that it is generally better to set up a more specific expense account than to list an expense as miscellaneous.Full Answer >
A general ledger is a type of accounting document that includes all of the financial records for a company, often consisting of additional documents to track credits and debits on individual accounts as well as monitor available equity and inventory. The document may appear in a physical book, in a series of custom spreadsheets, or as pages within a digital record-keeping program.Full Answer >
According to AccountingUnplugged.com, two primary types of ledgers are kept in accounting: the general ledger and the subsidiary ledger. The subsidiary ledger is commonly divided into two sub-ledgers: the accounts receivable sub-ledger and the accounts payable sub-ledger.Full Answer >