What is a manual system of accounting

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. 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. Therefore, the amount of space left for this column is narrow.

In contrast to that, the second column is employed for jotting down descriptions. Accordingly, the accountant provides the broadest amount of space for this column. Transaction amounts and other related details like sales and inventory and the like are jotted down in the remaining columns.

The paper pads are often printed in white stock or light green with a room for noting down each digit so that no handwriting related issues arise. Journals and ledgers provide support to the manual accounting process by helping the accountant to keep separate records for different types of transactions.

For example, one set of journals may be assigned for accounting cash sales. Considering that a manual accounting system may be less costly than specialized accounting software, small businesses may use them to reduce expenses such as computer equipment costs, software license fees, and employee training. Furthermore, a small business may also use a manual accounting system because it may not have a high volume of transactions to record in the accounting ledgers.

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