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Disadvantages of manual systems
include the following. 
Disadvantage 
Comment 
Productivity
Productivity
is usually lower, particularly in routine or operational situations such 
as transaction processing. 
Slower
Processing is 
slower
where large volumes of data need to be dealt with. 
Risk of errors
The 
risk of errors
is greater, especially in repetitive work like payroll calculations. 
Less accessible
Information on manual systems is generally 
less accessible
. Access to information 
is often restricted to one user at a time. 
Alterations
It is difficult to make 
corrections
. If a manual document contains errors or needs 
updating it is often necessary to recreate the 
whole
document from scratch. 
Quality of output
Quality of output
is less consistent and often not well designed. At worst, 
handwritten records may be illegible and so completely useless. 
Bulk
Paper-based systems are generally very 
bulky 
both to handle and to store 
However, don't assume that computerised systems are best in every situation. For example, a post-it 
note stuck on a colleague's desk with a brief message may in some cases be quicker than typing up an 
email message. 
7.3 Coding 
Computers require vital information to be expressed in the form of codes. For example, general ledger 
accounts might be coded individually by means of a two-digit code. 
00 
Ordinary share capital 
01 Share 
premium 
05 
Statement of profit or loss and other comprehensive income
15 Purchases 
22 
Receivables control account 
41 
Payables control account 
42 Interest 
43 Dividends 
In the same way, individual accounts must be given a unique code number in the receivables ledger and 
payables ledger. 
7.3.1 Example: coding 
When an invoice is received from a supplier (example code 1234) for $3,000 for the purchase of raw 
materials, the transaction might be coded for input to the computer as: 
General ledger 
 
Inventory 
Supplier Code 
Debit 
Credit 
 
Value 
Code 
Quantity 
1234 15 
41 
$3,000 
56742 
150 
Code 15 in our example represents purchases, and code 41 the payables control account from the list in 
Paragraph 6.3. This single input could be used to update the payables ledger, the general ledger and the 
inventory ledger. The inventory code may enable further analysis to be carried out, perhaps allocating 
the cost to a particular department or product. Thus the needs of both financial accounting and cost 
accounting can be fulfilled at once. 
BPP Tutor Toolkit Copy

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CHAPTER 8
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THE ROLE OF ACCOUNTING