Question

Tom Rice operates a small business and uses a manual system of accounting. Transactions are entered in the general journal and posted to accounts in the general ledger at the end of the month. Although the volume of transactions has increased significantly in the past year, Mr. Rice does not feel that it would be cost-effective to install an electronic accounting system. He hires you as a consultant to make recommendations about how to record transactions more efficiently. Briefly describe the principles that you would consider in making recommendations to Mr. Rice. (Please use complete sentences in answering.)

Answer 1

The principles to make the accounting system more efficient are mentioned below:

-The cutoff policies should be strictly set and adhered to. Making delayed adjustments in the bokkks of accounts can lead to misrepresentation.

- Bank accounts should be reconciled on a periodic basis to avoid last minute hassle.

- Number all general ledger accounts even in a manual accounting system for easy recording of transactions.

- Record transactions of similar nature at a time to save on time.

- Make sure that a periodic review of the transactions recorded is done.

- Accounting systems both manual and automated can become inefficient if not monitored. Thus, monitor the accounting systems regularly.