How Mechanized Accounting System Works

Pen and ink accounts maintained in business organization – big or small is called manual accounting system.

Most of the business concerns use adding machine, desk calculator, multi-copier etc.

For processing accounting data to save time and labor. Similarly many business organizations use electronic book keeping machine in keeping accounts.

An electronic book keeping machine contains a keyboard like type writer and the board is a ten-key calculator.

It possesses ‘functions keys’ which give instructions regarding operation of the machine, calculation, table preparation and printing of preserved data etc.

Book keeping machine does accounting work of sales, cash receipts, purchase, cash payment, payroll and other transactions. And it also performs the posting of transactions in general ledger.

But here we will not attempt to describe operation of book keeping machine in detail. However, when we use this machine for credit sale, for example, the current page of sales journal is placed with the machine.

Then for every credit sale the operator of the machine inserts the customer’s account and month-end statement in the machine and presses the proper keys to enter the information about sale.

The machine makes the entry in the sales journal posts to the customers’ accounts; makes the accounts balance up-to -date, enters the sale on the buyer’s month-end statement and makes the statement up-to-date.

Simultaneously the machine determines the month-end total of sales journal and debit accounts receivable and credit sales with the totals.


it performs all of this in one operation from one entry into the machine of proper data. And the machine is equally efficient to operate other transactions also. The book keeping machine can process accounting data fast.

This machine reduces transaction-errors by printing the same information on several different records in one operation.

However, the speed and volume of work the machine can perform efficiently are limited. As a result many business organizations have started computerized accounting data processing.

Computerized data processing

Without human intervention a machine which is more powerful, capable and complex in comparison to book keeping machine is used for data processing in a computer. A computer’s functions are as follows:

  • Inputting and storing data.
  • Arithmetical calculation of data.
  • Comparing units of the data to find smaller or bigger data.
  • Storing and rearranging data.
  • Printing statements from data stored in the computer.

Computers vary in size and speed with which they process data. The data are retained within magnetic tape or magnetic disc.

For inputting data in computer we use a terminal where there lies a keyboard which looks like typewriter key board and there is also a monitor like t.v. screen.- besides, data may also be entered with previously prepared rules of magnetic tape, magnetic disc and in other ways.

For example,

another means of entry uses a laser light that reads a barcode.


A computer programme is a language or instruction of a computer which is inserted in the computer earlier.

For example,

COBOL, Basic, RPG and FORTRAM are the widely used language. The instructions specifying each operation a computer is to perform are entered into the computer before the data processed.

A program may contain only a few or several thousand detailed instructions.

For example,

the following list shows the steps that are to be programmed to have a computer process customers’ orders for merchandise.

For first order of customer for merchandise purchase the quantity ordered for purchase is compared with the quantity available in the store as shown by inventory data stored in the computer.

If the quantity ordered is not available;

  • A back order is prepared informing the customer that sufficient stocks are not available but will be shipped as soon as new supply is available.
  • Then next item of customer’s order is considered.
  • If the stock in hand is greater than the quantities ordered.
  • Ordered amount is deducted from the stock.
  • Necessary instructions are given for shipment of goods.
  • After delivery of ordered goods the remaining stock is compared with re-order point for the item.

If the quantity remaining is greater than the re-order point;

  • Next item on the customer’s order is considered.

If the quantity remaining is less than the re-order point;

  • Amount to be purchased is computed and documents for the purchase are prepared.
  • Next item on customers order is considered.

Besides, a programme for processing customers’ orders would have instructions for preparing invoices, recording sales and updating customers’ accounts.

Designing the programme

Computer can find out the bigger number with the help of its set programme comparing two numbers.

This capacity helps computer in processing data one way or another depending on the result of comparison.

It is to be noted that, this ability to compare number is essential for the computer to follow instructions such as those for processing customers’ orders.

The programmer is to design a programme first to help computer in processing data correctly.

In designing the programme the programmer in advance determines the alternative sets of calculations or processing steps to be made.

Then the programmer devises the appropriate comparison that identifies the circumstances under which each particular set of processing steps is performed.

Finally the programmer writes specific instructions telling the computer how to process data.

A computer can follow through the programme’s maze of decisions and alternative instructions rapidly and accurately.

However if the computer faces an exception not anticipated in the programme, it becomes helpless, either gives wrong information or it stops.

The ability to store a programme and data and to sort out correct decisions and alternative distinguishes a computer from an electronic book-keeping machine.

There are some electronic books keeping machines which can do an addition, deduction, multiplication or division at the speed of computer.

But their operating rates are comparatively slow as because they depend on a person to push their functions keys to tell them what to do.


Computer operates in one of the two modes – batch processing or on line processing. In the batch mode, the programme and data are inputted to the computer and processed.

Thereafter these are removed from the computer before another batch is begun. Then the programme for new job and new set data are entered and the job is processed.

Batch processing may result in processing of customers’ order daily, preparation of weekly payroll, preparation of financial statement monthly and the processing of other jobs on periodic basis.

Batch processing is used when an immediate processing or immediate computer response is not required. Data processing under batch mode is less expensive in comparison to line mode.

In online processing, the programme is put in the computer along with required data. When new data are entered, these are instantly processed by the computer.

For example,

in some departmental stores the cash registers are connected directly into the store-computer. In addition to cash sales the registers are used as follows in recording charge sales.

After the customer selects merchandise for purchase, the salesman uses the customer’s plastic credit card to print the customer’s name on a blank sales ticket.

The sales ticket is then placed in the forms printer of the cash register and the sale is recorded. The register prints all relevant information on the sales ticket and totals it.

In order to finalize the sale, controls within the register require that the salesperson depresses the proper register keys to record the customer’s account number and for posting the sales to the customer’s account.

The salesperson does not post the account. Rather the data entered with the cash registers key causes the store computer to update the customer’s accounts. The computer also produces the customer’s month-end statement.

Online operations are followed in supermarkets, banks, airlines and also in some big factories.

Online operations reduce human labor, create more accurate records and provide management with better and more up-to-date reports. Moreover when there are sufficient transactions, they do the work at less cost per transaction.

Time saving

People have been able to win the time with the help of computer. Multifarious works can be done simultaneously through computer with quick result.

The customer inputting information using the input-output device can have results within few seconds.

Besides, using modem internet system a person can inquire about any matter or any information anywhere of the world giving a nominal charge where necessary. At present the physicians are also benefited using computer system.


Micro computer is a modem and developed form of computer. These types of computers are cheap and widely used.

Small business concerns or individuals are benefited using this type of computers in their day to day work. Modem computer system has almost eradicated the traditional system of recording accounts pen and ink.

In conclusion of the discussion it can be said that recording of day-to-day transactions of a business concerns can be made either by computer or by manual system using pen and ink.

But the method to be followed depends upon the condition of the business. General ledger reflects the progress or degrees of a business concern.

But the students should keep in mind, that preparation of general journal or special journal whatever might be and the method which is to be followed depends on the effective accounting system of an organization.