Using of manual system of accounting has become negligible after introduction of electronic software’s that have simplified the work. Still there lies doubt in the minds of the managers regarding the authenticity and complexity of this software. The discussion below has taken into consideration the benefits of implementation of accounting software. Also the report identifies the risks and limitations involved in implementation of this accounting software.Outline the economic transactions that would take place at a small business
Economic transactions are business transactions which initiates the process of recording of financial data in the accounts of the company. Now transactions may be simple or complex. (AICPA., 2017)
Simple transactions would be the transactions such as payment for purchases, recording for cash sales, payment of petty expenses, etc. Others transactions are complex transactions which come with a series of transactions such as credit transactions, issue of debit or credit notes, recording of loans, etcetera. All the transactions however simple or however complex form an important part of accounting and must all be recorded in the books of accounts. The intensity and frequency of transactions are more in large business as compared to that of small business. Large business involve branch transfers, maintaining subsidiary accounts, off shore transactions, etc which make the whole process of transaction recording complex.
Small business also has a lot of transactions record. Few examples of economic transactions that would take place at a small business would be:
Therefore, we see that though intensity and frequency of transactions are lower in small business as compared to large ones, but complexities still lie in all kinds of businesses. (Carlton and Perloff, 2005)
Outline the benefits of using an online accounting software tool.
The requirements of companies in the accounting world have become complex. In order to continue the smooth functioning of a business it is very important to carry out the accounting in a very planned and articulate manner. The small business entities generally go for manual form of accounting as there are not many transactions to record. But manual accounting involves great risk. `(Certo and Certo, n.d.)
Online accounting software tools now a day’s simplify the work of accounting along with increasing the reliability and reducing risk. There are a lot of advantages of using the online software tools. These online software tools simplify the work by flowing data in all necessary departments (Gleeson-White, n.d.). It saves time and also accuracy of data is not compromised with the use online software. These software’s help the management generate necessary reports based on which many bank release loans for the functioning of the entity. Also, the software’s help the management generate a forecast which is more like budget based on which decision can be made. Use of online software saves a lot of time and manual human labour. It helps to generate electronic invoices which helps eliminate the chances of mistake in data feeding. Online software also provides function such as ageing analysis which helps the entity collect its funds.
Therefore, we see that use of online accounting software has a lot of advantages. Also customisation of software according to ones requirement helps in cost savings.
Outline the problems Lydia and Sam face by using a manual accounting system.
In the given situation we see that Lydia and Sam are owners of a small business which is situated in four different locations, also they follow a manual system of accounting.
Manual system of accounting is generally used by small business which does not have its operations distributed to many places. Sam and Lydia have four store of eye wear and eye care business, in which use of manual system of accounting makes it difficult for them to maintain the books of accounts. (Hoffer, Ramesh and Topi, 2013)
There are a lot of difficulties that arise due to use of manual system of accounting. Since they have store with eye wear they would have stock of the eye wear goods. In the manual system of accounting it becomes difficult to monitor the stock flow from four different locations. Also, use of manual accounting creates a lot of burden when it comes to book keeping. One transaction needs to be recorded in many places which carry an element of risk. It also is very time consuming and requires a lot of manpower. Due to huge involvement of human labour many times important issues do not come in sight such as debtor collection, due date of payment of an expense, etc, missing these can create a financial harm to the entity. Use of manual system also makes it easier in cash embezzlement. (Hurt, n.d.)
Therefore, manual system is carries a lot of risks and also makes it difficult to execute the operations easily.
With reference to three (3) specific economic transactions that would take place at I SEE, detail how MYOB would be used and useful.
In the given situation Lydia and Sam have been using a manual form of accounting. Let us now consider the following cases in which MYOB will be useful to them:
Outline any limitations or risks that I SEE may face in the implementation of MYOB.
Though implementation of MYOB will be of great advantages to I SEE, Lydia and Sam may come across few risks and limitations (Walker and Madsen, n.d.):
AICPA., (2017). REVENUE RECOGNITION 2016. 1st ed. [S.l.]: JOHN WILEY.
Carlton, D. and Perloff, J. (2005). Modern industrial organization. 1st ed. Boston [etc.]: Pearson/Addison Wesley.
Certo, S. and Certo, S. (n.d.). Modern management. 1st ed.
Gleeson-White, J. (n.d.). Double entry. 1st ed.
Hoffer, J., Ramesh, V. and Topi, H. (2013). Modern database management. 1st ed. Boston: Pearson.
Hurt, R. (n.d.). Accounting information systems. 1st ed.
Micklethwait, J. and Wooldridge, A. (2005). The company. 1st ed. New York: Modern Library.
Romney, M. and Steinbart, P. (n.d.). Accounting information systems. 1st ed.
Tanenbaum, A. (2009). Modern operating systems. 1st ed. Upper Saddle River: Pearson Prentice Hall.
Walker, G. and Madsen, T. (n.d.). Modern competitive strategy. 1st ed.
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