New Developments In Electronic Book-Keeping
Peter Marshall Bsc (Econ) BA MBIM is a Fellow of the Society of Business Teachers, and an experienced educator in business subjects. He is also a prolific author and his books have been translated and sold worldwide. He lives in London, UK.
In previous editions of this book I have showed readers how to make use of the electronic pages of spreadsheets. I have, however, tended to stop short of dealing with computerised book-keeping packages, as they were, hitherto, rather too complicated for many people. Things have changed though; there are now various packages on the market to suit all needs and various ability and skill levels. A comprehensive book-keeping course book must now give some attention to these too.
Their use is not a substitute for a thorough knowledge of book-keeping, however. It is not much use having accounts if you don’t know what they mean and how to use them to control your business. Their use will merely speeds things up and take the donkeywork out of the job.
The industry standard product has, for long, been Sage Accounting Systems and there are a number of versions to suit different needs. Sage Accounting Systems used to be quite complicated, but things have changed here. The entry-level Sage Accounting System is now a product called Instant Accounts 8. This works on Windows 98 and above. It completes all of the standard books, it does your credit control automatically, completes your VAT records, converts from pounds to euros and vice versa and keeps supplier and customer records.
Sage Instant Accounts 8 plus has all that Instant Accounts 8 has plus a bit more. It integrates with Microsoft Office and it is email and Web enabled.
Then there is Sage’s TAS bookkeeper. This is much cheaper and it is another option for a first place to start in computerising your accounts. It is a simple and basic system, but it is easy to learn and use.
For larger businesses and people with more computer skills, there is Sage Instant Business Suite package. It does all that Instant Accounts 8 does, plus payroll records, employee records and statutory forms.
A package that some of the banks promote is Quicken. This is considerably cheaper than other packages at only £16.95, but while it is useful for business accounts, it is really more appropriate for personal finances. It can handle bank account management, including bank reconciliation and savings and asset management. The wizard it has is very helpful.
One of the best systems around is Simply Books. This is less complicated than many other systems. It is quick to install; it takes only about two minutes, it works on Windows 95 and above. This is a virtually idiot-proof system. The instructions are very simple and the spreadsheet type pages, such as are seen in Chapter 76 of this book, make new users feel at home if they are familiar with using Microsoft Excel.
It is designed for sole traders and small businesses, with up to five employees, so it is obviously stripped down to the basics. However, it does all the standard books of account, prints invoices, records them automatically and it shows your bank reconciliation.
For computerised accounting you will need a computer, a printer, a mouse and a spreadsheet program, or a computerised accountancy software package. In computerised book-keeping, ledger account names are replaced with codes. The computer can interpret these and debit or credit the ledger accounts accordingly.
Advantages of computerised book-keeping systems
- Some types of error will be eliminated.
- Casting (summation) is automatic.
- Posting is automatic.
- Ledger balancing is automatic.
- Extraction of trial balance can be done at any time automatically at the touch of a few keys.
- There are also many stock control advantages.
- Reduced skilled labour costs, as large amounts of data are processed by computer rather than manually.
- Easier communication of accounts, as authorised people can access them by computer.
- Live, centralised accounting is made feasible for many remote branches of firms, as happens in some pub chains, where data from tills is processed live at head office.
Computerisation of the accounts will prevent some errors, but not all types. The error types it will prevent are:
- errors of omission
- compensatory errors
- errors of original entry
- errors of principle.
The types it will not prevent are:
- errors of reversal
- posting one side to wrong side of ledger
- omission of one side only
- under/overstatement of one side
- errors of summation
- casting errors
- transposition errors.
See page 150 for an explanation of what these error terms mean.