ACCOUNTING

Modern Accounting Systems

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Modern Accounting Systems

Modern Accounting Systems

Modern accounting is has become an important element of a company, as it fulfills not only the basic accounting requirements but also the advance needs such as, accuracy and quick access to data. It assists in maintaining the company reports of any earnings or operating expense that are acquired by a company on an everyday basis at a fast pace. These features of modern accounting systems let management make better use of resources to increase profits while identifying cost savings and spending less.

The value of the goods and services a company offers is based on demand and on how quickly the company can deliver them. Once sales estimates are in place, modern accounting systems let the company place corresponding orders and track progress quickly and accurately. Faster response to market demands, fewer demand bottlenecks and less overproduction add value to the company's spectrum of products and services (Hatfield, 2008).

Modern accounting systems let managers monitor costs in greater detail than before. Such systems give top-level management direct access to data that is needed for future purpose. By controlling such costs and making sure they are within or below budget, managers can increase profit by reducing cost.

In contrast to traditional methods of accounting, where paper-based statements are complex to evaluate because the amount of paper is increasing with time range of the evaluation, modern systems can easily display old records and trends based on previous years. Managers can consult old budgets and cost data to improve current estimates. When external conditions change, modern systems have the ability to predict results for different scenarios, allowing management to improve forecasting with predictions for all eventualities. A manager using such systems can continuously improve the accuracy of his forecasting. Further, modern accounting also reduces human errors, making it accurate than before (Hatfield, 2008).

Cash Vs. Accrual Accounting Method

Cash-basis accounting is a method of bookkeeping that records financial events based on the cash flows and cash position. Revenue is recognized when cash is received and cost is recognized when cash is paid. In cash-accounting basis, revenues and expenses are also called cash receipts and cash payments.

Cash-basis accounting does not recognize promises to pay or expectations to receive money or keep it in the future, for instance amounts payable, notes receivable and prepaid costs or magnified.

Cash basis and accrual are often compared. If a firm's main business is buying and selling goods, it is suggested that it uses an accrual rather than cash basis of accounting. Using the accrual basis, inventory records will become simple. In accrual, revenue shall be recognized after the sale of goods, regardless of whether the company received the money and regardless of whether the actual payment must be deducted from the same period of the financial costs (Lynch, 2001). Finally, we conclude that, if your company is small, you should use cash basis of accounting. With the changing business ...