Printer Friendly

Accounting & computers: the perfect union.

When you come right down to it, can you think of any profession better suited to computerization than accounting? All those numbers, all those journals, ledgers, reports and forms! By its very nature the most repetitive of the professions in procedure, it only grows more repetitive and complicated as business becomes more aggressive, government more demanding and individuals more sophisticated in their financial pursuits.

It's surprising, therefore, that a profession so ideally suited to the use of a computer remains relatively uncomputerized. At a recent tax seminar, one of the speakers estimated that only about 60% of all accountants and accounting firms are using computers, but this figure includes the larger public accounting firms which are fully computerized as well as the practitioner who uses a computer only for tax work. That leaves a good 40% or more out there who remain unconcerned or unconvinced that computerization of their daily accounting practice will not only bring them into the forefront of the profession in the '90s, but mean higher profits, additional personal time and, most significantly, more opportunities to do what they've been uniquely trained for -- providing financial advice, counseling and expertise to their clients -- the very personal services the computer can't provide.

Why Not Computerize?

Understandably, then, the question may be posed: why, or better still, why not computerize? All you have to do is get into the middle of a conversation at a seminar or convention with practitioners who do not have computers to note that their reasons range from a determined resistance to change to a reluctance to undertake what they perceive to be a long period of adjustment and training, to the cost of computerization, to, finally, the big one, the catch-all put-it-off, the "wait-a-few-years-and-they'll-come-out-with-something-better" syndrome.

Of all the reasons given, though, the one that appears to underlie all the others is the resistance to change. Everyone is used to doing things a certain way. You feel "at home" with familiar procedures and, if the truth be known, really don't understand what computer technology is all about. Well, let's go back for a moment and consider the human brain, easily the universe's (and the accountant's) first computer. Every accountant, it is presumed, has one.

It was the brain that sat squarely on your head in your college accounting classes. It was the brain that assimilated the mechanics of accounting and conceptualized its integral relationship with management, marketing, economics and finance. All this information, these applications, are, effectively, only "software" for the computer that is the brain. Just apply this concept to a machine that sits on your desk and the software that tells that machine how to make a journal entry, run a report or complete a 941 and you're on your way to understanding why computers and accounting are a perfect union.

A Look at Hardware

At the risk of being elemental, let's look at what has evolved in accounting "hardware" since the brain. You might find it interesting to know that when computer use in business was first envisioned, it was the accounting departments of large corporations to which IBM and other mainframe giants directed their attention. The single practitioner or small accounting firm was justifiably overwhelmed by the size, cost and intimidating know-how that seemed to go hand-in-glove with computerization. But in just a few short years, the computer has become not much larger than a typewriter, has capacities that were undreamed of 10 years ago and can be as light in weight as 18 pounds, a feature that has particular appeal to the accountant who is often out of the office and with a client.

Let's consider the three categories of computer: the mainframe, which is hardly ever used today in even the largest of accounting firms; the mini, still utilized by some of the larger firms; and the micro or "desktop" which has become a necessity in all types of accounting firms, large or small.

In considering the micro computer for the accountant, there are basically four types.

1. Desktop: a unit that is not meant to be moved around as the component parts weigh about 50 lbs. or more;

2. Portable: weighing 25-to-35 lbs., it can be moved from area to area within an office, but is not used extensively for out-of-office travel;

3. Laptops: about the size of a briefcase, these weigh about 10 to 18 lbs. and are intended for extensive travel use; and

4. Notepad computers: which may weigh only three-to-six lbs. and are held in one hand. These are really not appropriate for accountants, but rather are used by out-of-office corporate executives and salesmen for notes and memos.

A Word About Disks

Desktops were introduced more than 10 years ago and were originally of floppy-disk-drive design only. Hard-disk drive micros are available today at a price anyone can afford.

Just to keep the uninitiated on course, a floppy disk is a removable, magnetically-encoded object that holds programs and the data generated from those programs. Available in two sizes -- 5 1/4" in diameter and 3 1/2" in diameter -- the 3 1/2" is sometimes mistaken for a hard disk by the novice because the magnetic disk is encased in a rigid plastic case that makes it inflexible. However, the actual disk inside the case is as flexible as the more obvious 5 1/4" floppy disk.

A hard disk is a larger, magnetically-encoded cylinder that is permanently affixed in the computer. It works and acts precisely the same as a floppy disk, but it is not removable and has a far greater capacity for data storage. Every computer utilizes at least one floppy-disk drive. Hard-disk drives are available in desktops, portables and laptops.

Desktops and portables utilize the traditional, easily-viewable CRT screen which can range in size from 8" to 15" and is available in full color. These CRT screens are too heavy and cumbersome for laptop computers which use instead either the LCD or the gas plasma screen. The LCD, though light in weight, may be difficult to view under certain light conditions. The gas plasma screen weighs a bit more and is a bit more expensive, but the viewability is excellent. It is available usually in an orange-on-black screen, and recent developments indicate it will soon be available in full color, at a higher price, of course.

A good point to remember about laptop computers is they usually come with built-in adapters to allow the user to plug the computer into a traditional CRT screen back at the office. This feature means a light-weight model for the road (or a client's office) and a more viewable CRT for longer periods of work.


Networks make use of several micro computers to work similarly to a mini computer but at a lesser cost. Micro computers are designed to be used by one person at a time; mini computers allow for many people to use the computer via terminals. Networks take relatively inexpensive micro computers and hook them up to one, larger-capacity, hard-disk micro computer. This hard disk is the resource that will be used by the smaller computers which are not "dumb" terminals but fully-functioning computers. For most applications, networks are excellent choices for accounting firms as practices expand.

Peripheral Products

Dot matrix and laser are the two types of printers to consider. A dot-matrix printer forms all of its letters and numbers by a series of tiny points that physically hit a ribbon and print on paper. Until recently, a type of printer referred to as "letter-quality" was preferred by many accounting firms, but that is virtually a thing of the past. These letter-quality printers have been surpassed by better dot matrix printers and the availability of laser printing at an affordable price.

There are two types of dot-matrix printers from which to choose: 8 1/2" wide and 14" wide. The wider printer may cost $200-$300 more, however the increased utility makes it worth the difference. Some applications, for example, require the printing of reports on wider paper. The 8 1/2" wide printer, through software commands, can utilize compressed type and simulate the wider-columned paper, but some accountants do not like this compression for aesthetic reasons.

Today's laser technology has made printers once beyond the pocketbook of the average accounting firm within the financial reach of most firms. They can reproduce forms to an exactness that can be likened only to a printing press. Blank, white bond paper can be turned into an employee's W2 or a 1040 that is an exact replica of the federal form. Since so much of the accountant's work today is geared toward the production of government forms, an investment in a laser printer is a good one.

Among other peripheral hardware items to be considered is the modem, an attachment connecting the computer to a standard telephone line, allowing data transmission from one computer to another (both computers must be equipped with a modem). Just as two individuals can communicate by dialing a number, so too can computers.

There's really very little need to concern yourself with modems initially unless you anticipate filing tax reports with the government electronically or, perhaps, receiving enhancements and updates from your software supplier on an immediate basis. Usually, this type of hookup is something that can be attached after you are up and running and comfortable with your computer.

Tape back-up devices are another example of peripheral products that are not necessary but nice to have. Installed in the computer, they are intended to provide safety backups that can hold tens of millions of pieces of information. In actual practice, it may be simpler and easier to have the back-up done with little bits of data at a time using floppy disks.

Surge protectors and battery backups are devices that are helpful in those cases where power outages and heavy static are likely to occur. When an outage occurs, the computer's memory fails. When the power is restored, the data that were being input at the time of the power failure are completely mixed-up and unusable. But even without these devices, power failures don't have to be disasters if you keep good back-up copies. You can then easily load your back-up copies into your machine and restore it to its original condition.

Surge protectors don't help in black-out situations. Rather, they are effective where there are very slightly-fluctuating electrical conditions, such as heavy machinery in another part of the building. Battery back-up devices switch the computer to a reserve battery with about 20 minutes of power so you can take the necessary steps to properly complete your program and close the computer down.


Software is synonymous with program and is, simply, a set of directions to make the computer do what is intended. Before getting into the specialized programs available for the accounting profession, it's a good idea to get familiar with what amounts to the first set of instructions any computer will receive. Those instructions are DOS, which translates to Disk Operating System. DOS, in effect, tells the physical components of a computer -- the keyboard, the hard disk, the screens, the wires, etc. -- how to communicate with each other. It is a very complex mechanism about which the average user needs to know very little. However, even a small amount of knowledge about DOS and some of the commands it employs will help you properly manage your computer and software.

Figure 1 provides a list of eight commands that will give you an edge in understanding DOS. Of the multitude of other things that DOS can be used for and told to do, most of them are automatic and knowledge of them is usually only pertinent to an experienced programmer.

Industry-Specific Software

There's a significant difference between accounting software and software for accountants. Accounting software is available for all types of businesses, but software packages that concentrate on the particular needs of the professional accountant are the only types to buy. These are industry-specific, and you'll be wasting your time and money if you settle for less. While industry-specific, or vertical market programs, may be a bit more expensive at the outset, in the long run they'll return the extra expense to you in terms of time and effort expended and saved.

For instance, a general ledger write-up package for the public accounting firm will contain subsidiary journals for receipts and disbursements, sales and purchases, as well as general journal. These specific journals, of course, are necessary in doing a write-up where the client keeps the source documents and no journalization, cash book or check registers are manufactured. The responsibility is the accountant's to produce them. Standard, non-specific general ledger systems will not produce these subsidiary journals.

Similarly, the employee recordkeeping necessary to produce quarterly tax reports and year-end W2s are an essential part of a client general ledger write-up system. Again, this recordkeeping would not be part of a standardized general ledger program but is an integral part of most client write-up programs.

Having these abilities available to you, the accountant, in the software package will save you countless hours of reworking the same figures in order to produce the necessary reports. It's even possible to find write-up systems that will feed data directly into tax programs for the 1120, 1120S and 1065 forms, even if these tax programs are not produced by the same manufacturer of the general ledger system.

Similarly, there are tax programs developed to assist the average citizen with his taxes, but they hardly fit the needs of the professional tax preparer. Rather, a professional tax package which will cover all the tax law requirements for both federal and state and be able to maintain many clients automatically, bringing forth figures from one year to the next as carryovers, is the appropriate choice.

Other software that might be helpful around the office after you've selected your primary software need not be so industry-specific. Here word-processing programs, spread-sheet, desk memo and other products may be chosen from the wide variety of programs available to the general public.

Computerizing, at Last!

Now that you've read and hopefully digested all the information on hardware, software and peripherals, it's time to bite the bullet and go forward. With lower hardware costs and many software options available, even a part-time practitioner today can afford to automate if he or she is willing to consider starting small and allowing the computer system to grow with the practice. Inexpensive hardware is available from distributors and mail-order houses. However, be aware that under these circumstances, you're basically on your own. You'll make your selection from a catalog without a salesperson to assist you, and it will come in a brown box with instruction books. But if you're short on money and long on time to read and experiment, the "no-frills" approach is a very viable option. Consult with colleagues regarding which suppliers they have used and found satisfactory. Remember that service and maintenance requirements should be primary considerations in choosing a hardware vendor.

Many software companies now offer programs on a per-client basis. With this option, instead of investing large sums of money in software programs, many packages can be had for just a few dollars with a per-client pricing package. When choosing software, it is important to look for a company with a reputation for good support. As good as the best of programs may be, there is no doubt that you'll need help from time to time with facets of the program. If you can be assured that the person answering the telephone actually knows DOS, and, more relevantly, knows a debit from a credit and an adjusting entry from a reversing entry, it can mean major peace of mind when you're trying to get your work done and you, the computer and/or the software are being difficult.

A second aspect to consider is how well-maintained a program is. It might be thought at first that once you buy a program, it will remain the same forever. That's not true, nor would you want it to remain the same even it it could. As laws, methodology and technology change, see to it that the company you have chose has a history of keeping that software up to date with advances in both the accounting profession as well as in the computer industry.

Sometimes in an attempt to hang too many bells and whistles from software, the program becomes very difficult to understand and to run, obfuscating the original job for which it was intended. A good program will be simple to operate, written for the user, and will not be much different in basic procedures than the accounting procedures you learned in school. A journal entry is still a journal entry, for example, only typed on a keyboard instead of written in a post binder. From the time you make an entry to the printout of a record, the program should be simple and direct without a half-dozen computer gyrations in between. In other words, look for the program that has substance and was written for your industry with the novice user in mind.

New Features

A good feature to consider is the recently-developed ability by some software companies to have date from other programs integrate with their company's programs. These programs are usually not competitive but relational to the industry. For example, to be able to output the data from your general ledger program to a tax program can save you 85% of the time it used to take for the same program. Flowing of data from your client's receivables system into your own general ledger is a new and important feature to look for.

Companies specializing in write-up programs for accounting firms are now developing feed in programs to allow data from clients' subsidiary ledger work for Receivables, Payables and Payroll to be automatically passed to the accountant for the general ledger and financial reporting that he alone controls. This innovation in accounting software can be quite helpful to both the accountant and client. Also, outputting data from the general ledger to spreadsheet programs to allow forecasting may be beneficial to some of your more-sophisticated clients.

Some Final Tips

Don't be afraid to open your mind to new technologies, new methods. This not only applies to the first-time computer user, but the second and third generation user as well. Advances in the industry have led many accountants to change their software and hardware to take advantage of the newest technologies. It's not as expensive nor as prohibitive in terms of time and effort as you might think.

Ask your friends and business and professional associates about their experiences and recommendations. You may find that good local hardware dealer by referral or get a good lead on the right software company. Also, read the ads in your prfessional magazines and journals for software companies and their products. Companies specializing in the accounting market advertise extensively in these publications.

Talk to software and hardware exhibitors at seminars, conventions and trade shows. There are a number of these held during the spring and summer months that offer good opportunities for relaxed conservation and "hands-on" demonstrations.

When you are considering a software vendor, ask for a list of customers whom you can call to evaluate the company's technical support and reputation. And buy only as much hardware or software as you really need. You can always add options, workstations, networking, modems and other peripheral products when you feel comfortable with the system.

Finally, don't get discouraged. Be patient and easy on yourself. In just a few short weeks after you've moved into computerization, you'll wonder how you ever managed your practice any other way.
COPYRIGHT 1991 National Society of Public Accountants
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Author:Pellman, Thea Graves
Publication:The National Public Accountant
Date:May 1, 1991
Previous Article:Computing the standard mileage rate.
Next Article:The productivity factor: justifying your computer purchase.

Related Articles
How to match computers and accounting software.
For sale: financial services.
Denali Alaskan Federal Credit Union.
Internal-use software statement issued.
Microcomputers present a new internal control challenge.
Blytheville credit union under cease-and-desist order.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters