Accounting Systems

Overview

Description

An accounting system is an essential part of maintaining the financial and operating activities of a business. The basic components of an accounting system are comprised of revenue and cash receipts, purchases and cash payments, and detailed individual creditor and consumer accounts. While some organizations begin with a manual accounting system, as the company grows, many of them transition into a computerized accounting system. As a result, the maintenance of the accounting system is simplified, and processes become more efficient. With the growth of technology and the stability of the Internet, companies engaging in e-commerce use the Internet to obtain real-time accounting information through online applications for accounting systems.

At A Glance

  • The types of companies that generally use manual systems are start-up organizations and companies with limited financial transactions.
  • The purpose of subsidiary ledgers is to provide detailed backup information for summarized information presented in the control accounts and the general ledger. The purpose of control accounts is to provide a summary of all the detailed information presented in the subsidiary ledgers.
  • Four common special journals include the revenue journal, cash receipts journal, purchases journal, and cash payments journal.
  • The three main advantages of using a computerized accounting system are having a simplified record-keeping process, more accurate information, and current account balance information.
  • QuickBooks is one of the most popular types of accounting software packages used as a computerized accounting system.
  • Some benefits of using the Internet for e-commerce include improved efficiency, speed of transactions, and the ability to generate accounting transaction information as it occurs.
  • Accounting-related uses of the Internet may include the management of supplies, planning marketing and sales efforts to consumers, planning the development and design of products, and cloud accounting applications.