Acc 205 Accounting Final

Modern Accounting Systems 1

Modern Accounting Systems Making a Difference in Modern Organizations
Jacqueline Agnew
ACC 205 Principals of Accounting I
Brent Tabor
March 25, 2012

Modern Accounting Systems 2

The process of accounting has transformed over time. From early civilization to the 21st century, improvements to the accounting system have become a major factor in business today.
The very early stages of accounting started with clay tokens and abacas. Double entry bookkeeping came to exist during the commercial revolution. In Italy, a Franciscan Monk named Luca Pacioli wrote a math book that suggested to merchants the need for three things; sufficient cash or credit, an accounting system, and a good bookkeeper. (http://www.topaccountingdegrees.com, 2012). It was in the late 18th century, that cost accounting became commonly known by a potter named Josiah Wedgwood. After the depression, he discovered that his paperwork was being overlooked by his clerk and that the clerk was stealing his money. Josiah then took the time to go over his books and found inaccuracies and the importance of calculating his overhead into his pottery costs.
In 1845 the occupation of accounting became known in London where the process of accounting started as columned ledger books requiring hours to manually record information and requiring more than one clerk to record the data. Data was being recorded in ink instead of pencil causing accidental ink blots which made it difficult for the business owners to understand. In 1885 an inventor named William Burroughs invented the first adding machine. Soon after his invention calculators were created and this led to fewer mistakes, greater accountability, and an increase in the speed of the accountants. (http://topaccountingdegrees.com., 2012)

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In 1930 a professor from MIT named Vannevar Bush built an electronic differential analyzer, MIT??™s first computer. Konrad Zuse and Howard Aiken invented a hybrid binary arithmetic machine that used electric relays to calculate sums. In 1942, Aiken joined IBM to build the first computer. The invention of the computer eliminated calculators, pencils and ledgers and adding machines and introduced electronic spreadsheets. With this new technology, accounts are now considered to be more efficient, accountable and able to eliminate more mistakes. With the invention of computers, it has created ways to back up data that could not have been done in the early stages of accounting. In the past with paper legers, if there was a fire, flood or other disaster, the information would be lost forever. It was also difficult to look for past information, because as time went on the more the volume of paper accumulated. This also made it difficult to store the high volume of ledgers. (Markgraf, 2012) With modern technology, there are many ways to store and back up data, get fast access to data which allows for a clearer and more comprehensive view of a company??™s financial health.
Even though the purpose of accounting has stayed the same, the basic procedures and its methods have changed. With modern accounting systems, business owners can analyze, record, and report their financial information and see how their money is being spent. Having accurate accounting information allows business owners to secure bank loans, seek investor financing, and startup capital, and compare their company within its industry and competitors..

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Accountants have several policies and principles that have to be followed. This means that the accountants have to provide information to help management make informed decisions regarding their business. They also have to offer the information to creditors, investors, and employees, and make sure the laws are being followed. Accountants have to verify that records and reports are accurate, show where an improvement for efficiency is located, and protect against activities that could cost the company money such as embezzlement, and fraud. (Investopedia, 2008). As time has transformed accounting from paper to electronic spreadsheets, it has also added new duties that have gone beyond recording numbers. Accountants have become more professional and imperative to a business with the increase in duties. Some accountants are used once a month, weekly, or yearly depending on the needs of the business. Accountants are mostly needed during tax time and are considered more valuable than those trained by tax franchises that teach people how to enter information into computers.
We now see how the transformation of accountants over time has created improvements to the accounting system that has put accountants to become major factors in business today. With their increase in duties, accountants are valuable assets to any company

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References
Markgraf,B. (2012). How Have Modern Accounting Systems Made a Difference in Modern Organizations Retrieved from http://smallbusiness.chron.com/modern-accounting-systems-made-difference-modern-organizations-14504.html

How Technology Has Impacted Accounting. Retrieved from http://www.topaccounting.com/how-technology-has-changed-accounting.html.

Vitez, O. (2012). Role of Accounting in the Modern Business Environment. Retrieved from http://smalllbusiness.chron.com/role-accounting-modern-business-environment-4010.html.

Beattie, A. (2012. Retrieved from http://www.investopedia.com/articles/tax/08/accounting-taxes.asp#ixzz1qAiMhUJL/.