Modern Accounting Systems

All the companies in the world are focusing on broadening both in terms of the gains they make and the number of customers they have and this has seen a lot of enhancements in practically all sectors of the companies. The accounting sector has experienced a high level enhancement due to the intro of the modern accounting systems. Modern accounting systems have actually made sure that the companies bring out their accounting work with making use of modern-day accounting systems that are more efficient compared to the earlier accounting systems.

Organizations that have embraced the modern accounting systems have had an included advantage over those that have not. In the current dynamic economic world organizations are attempting very difficult to be more competitive than their rivals and embracing the modern accounting systems has actually helped organizations attain a competitive advantage. Many of the leading accountants on the planet both in the private and in the public sector have realized the requirement for much better and efficient accounting systems.

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In addition to the contemporary accounting systems companies have actually realized that there is requirement to understand accounting concepts due to the fact that the modern systems can not achieve their anticipated results without the correct knowledge. For organizations to best handle their resources they have to develop a method of determining the resources and this has seen the accounting sector of many companies to be extremely essential in the management of the organization. Essentially an accounting system is expected to assist an organization in comprehending its operations and also know if it is making profits or losses.

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Without an accounting system the organization might not be able to forecast any shortages in the capital or in other essential resources. An accounting system enables a company to have a record of all its debtors and therefore it is able to understand those consumers or customers that have not cleared their debts or those who are paying at a sluggish rate. This assists the organization to identify the credit value of its customers and for that reason it knows the limits to which it might extend its credit services.

Organizations in the early days needed an accounting system that would meet the basic needs of an accounting system but currently due to the revolution in the sector most organizations have become very innovative ion the accounting sector (Jae and Joel, 2000). The accounting perspective of both small organizations and large organizations has currently undergone a huge revolution with the introduction of the modern management accounting systems. Most organizations have therefore concentrated on their accounting systems with the hope of improving them by use of modern management accounting models.

Modern accounting systems have played a very crucial role in organizations in that they help the managers make decisions regarding the organization. Managers are also able to set realistic strategic goals for the organization and ensure that the goals are achieved within the set timeframe by use of the modern accounting systems. Compared to the earlier days managers would set goals that would not be achieved by the organization and therefore the organization ends up spending a lot of time and resources in efforts to achieve the goals.

This means that organizations are now able to use their resources and time in achievable goals and therefore they attain a competitive advantage over their rivals in the market. Issues related to planning and controls within the organization are catered for by the modern accounting systems and so the workers and the management work toward achieving a common goal for the improvement of the organization. Due to the use of modern accounting systems most organizations are getting to their full capacity levels and also enjoying an increase n their sales leading to an increase in the profits.

The modern systems have also encouraged an increase in the level of automation and computerization in organizations because most of these systems require organizations to automate or computerize their operations. Automated operations have been seen to be more efficient as compared to manual operations. This is because the number of errors made in an automated system is far below the errors on a manual accounting system. An accounting system that has a lot of errors will result to errors in the whole organization which then leads to losses.

Organizations that have automated their systems due to the use of modern accounting systems are more likely to expand at a higher rate as compared those operating manually. For organizations to succeed in the current competitive economic environment they have to ensure that all the necessary requirements by the law are met. One of the major reasons why organizations fail is because of increased problems with the law authorities and other tax collection authorities. The early accounting systems did not have an effective means of ensuring that the organization does not collide with the authorities.

This is different with the modern accounting systems because they reduce the problems that used to exist between the organization and the authorities. An organization that has fewer problems with the authorities is able to reduce its expenses because it does not fall a victim of the fines that are put on organizations that evade tax and laws. The traditional accounting system did not give the required attention to the internal and external cost controls and so it ended up matching the expenses and the revenues of organizations in the wrong way.

This wrong match led to organizations mismanagement due to wrong estimation of the revenue or the expenses. Modern accounting systems emphasize on internal and external cost controls and therefore organizations get the right match of their revenue and expenses (Brynjolfsson and Hitt, 2000). The use of modern technologies that enable organizations to collect, monitor and disseminate information has made it possible for organizations to enter into transactions with other organizations and this has ensured that organizations become more profitable.

Modern accounting systems have allowed organizations to enter into successful inter organizational markets. Organizations have therefore been able to come up with joint ventures so as to be more competitive in the market and has seen organizations dominate markets hence high and continued profits. The success of joint ventures depends on the availability of information to both organizations and the modern accounting systems are a good source of information because all the information regarding the organization is stored in the systems (William, 2007).

The modern accounting systems have helped organizations to plan their resources in the right way. Resource planning in organizations is very crucial since lack of planning leads to losses within the organization or the organization is unable to attain its goal. One of the major resources that the modern accounting systems have been known to plan is the human resource. An organization that adopts the modern accounting system finds it easier to manage the employee because information regarding all the employees is stored in the systems.

The old accounting system did not have a way of storing all the information of the employees’ especially in large organizations and so the organizations could not achieve the best out of the employees. Those organizations that have adopted modern accounting systems are able to manage their cost more efficiently as compared to other organizations. Cost management is different from the cost accounting in that it is concerning with the management of costs whether or not those costs impact directly on the financial accounts or the inventory.

Modern accounting systems simplify the cost accounting procedures and this helps the managers of organizations to effectively manage and control the costs in the organization. Organizations that achieve effective cost management have increased quality, improved overall management and a better cost. The traditional accounting systems were very complex due to the many transactions that were involved and the numerous data that had to be handled by the systems.

This made them quite tedious as compared to the modern accounting systems that are easy to work with and therefore the accountants do not get exhausted when working with these systems and this ensures that they do not make errors in their work. The modern accounting systems support the management needs of the organization and therefore they are useful in making decisions regarding the pricing, marketing, design of the product and they enhance continued improvements in the operations of the organization.

Organizations that have adopted the modern accounting systems have been seen to reduce their levels of inventory and this means that they invest less in inventories. The overall inventory level is reduced because the systems require the smallest quantity of inputs and materials at any time (Charles and Walter, 2007). The other major difference that the modern accounting systems have brought to the modern organizations is that there is easy access to the financial statements of the modern organizations.

When an organization’s financial statements are easy to access it becomes easier for other individuals outside the organization to detect any mistakes in the statements and demand explanation. Organizations that have an easy way of accessing their financial statements will also develop a positive reputation from the general public and therefore more people will like to be associated with the organization. This means that the organization will increase its sales and consequently the profits will also go up.

The organization also builds a strong relationship with the employees because they are able to access the financial statements and this helps them gauge their productivity to the organization. Accountability is a very crucial issue in the current market environment. Modern accounting systems ensure that the management of the organization is accountable for all the resources that are at their disposal. Accountability of the management has seen most of the modern organizations eliminate the issue of corruption which greatly harms the organization if it is nurtured.

The stakeholders of the modern organizations have also increased their confidence in the organizations because they find it easy to access the financial statements of the organization. Organizations that have adopted the modern accounting systems are able to acquire more finances compared to others. This is because the financial institutions are able to access the financial statements of these organizations and at the same time monitor their cash flow so as to determine if the organization is able to repay the amount of money borrowed.

Organizations that use the modern accounting systems have an easier system of monitoring their accounts and so the government finds it easier to work with such organizations. This means that this kind of organizations have now started receiving government support unlike in the past when it was quite difficult for the government to gain access to the financial accounts of some organizations (Brynjolfsson, and Hitt, 2000).

Organizations that use the modern accounting systems are able to cut down their workforce because the systems do not require a huge labor force. This is because most of the modern accounting systems are computerized and therefore the tasks that would be done by a group of employees are carried out by a single employee with the help of a machine like a computer. The accounting information is also stored in a safe manner and this means that the information may not be tampered with.

Tampering with the accounting information of an organization may result to huge losses or the organization may damage its reputation and therefore it looses its customers and employees. Service offering organizations like banks and hospitals have felt the effect of the modern accounting systems in that unlike in the past when attending to their clients was a tedious and time consuming exercise, the modern systems have made it possible for employees to attend to clients at a higher rate and effectively.

This has increased the number of clients that the organizations attend to and therefore there is an increase in the profit of the organization. Currently there is uniformity in the accounts of many organizations and this has made it easier for government and the public to scrutinize the accounts unlike in the past when each organization had its own way of recording its transactions. The cost of communication and transport that organizations used to incur in the early days has been reduced by the evolution of the modern accounting systems.

This is so because the systems are mostly computerized and therefore most of the transactions can be made over the internet instead of having to travel long distances. On the other hand the modern accounting systems have some disadvantages although they do not outweigh the numerous benefits to organizations. One of the major disadvantages of the modern accounting systems is that they have made many individuals lose their jobs.

One example is that in the early days when all transactions had to be done on paper there were bookkeepers and other employees who were in charge of maintaining the files, these group of people lost their jobs with the evolution of the modern accounting systems. The other problem is that the modern accounting systems make use of the internet to make transactions which many see as a risky way because of the numerous internet hackers.

In conclusion the current modern accounting systems have led to an improvement in the management and the productivity of most modern organizations. Apart from improved accounting systems most organizations have had improved managerial operations derived from the modern accounting systems. The systems have made the following major differences in the modern organizations: reduced the problems of tax authorities, it is now easier to access the financial statements of most organizations, the systems provide an excellent tool for management of organizations and it is easier to report the transactions of organizations.

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Modern Accounting Systems. (2016, Sep 23). Retrieved from https://studymoose.com/modern-accounting-systems-essay

Modern Accounting Systems

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