Information technology advances the accounting profession.
Prior to computers and computer networks, businesses used handwritten ledgers to track expenses, accounts receivables, accounts payable and produce financial reports. Technological developments have completely revolutionized this model. It affects every area of accounting; from tracking data to to the production of financial statements.
Tracking Data
Small businesses use specialized accounting packages and spreadsheets to track and record data. Larger organizations use enterprise resource planning (ERP) software and systems to comb every area of corporate enterprise transactional, payroll and general operations to collect, store and process accounting data as required.
Financial Reporting
Accounting principles and rules dictate that businesses produce financial reports such as balance sheets and income statements. This activity requires a significant amount of data evaluation and checks and balances. Many small businesses use accounting software programs or spreadsheet applications to automatically process the numbers. ERP applications offer a rich set of accounting features accessible with the click of a computer mouse.
Financial Statements and Reporting
Small business and ERP software also let companies produce elaborate financial reports and financial statements in real time; even pro-forma accounting reports where companies run financial simulations based on what-if scenarios and produce hypothetical accounting reports are available using technology.
