What was accounting like before computers?

[ee99ee]

How was accounting done before computers? I'm sure the same methods were used that are used today, but all the data that's put into these accounting systems even for the smallest of business is substantial.

If all the paper trail for a business' book keeping system would have to be brought into an accountant, wouldn't it take something along the lines of a UHAUL truck to move it all at once (for the small businesses, of course... the accountant would have to be brought into the business for more then 5 people businesses I'm sure because of all the paper.)

I mean think about it. When you take it to your accountant now, you just burn the data file to a CD or something... peice of cake... all that information, in one place... how on earth would you do it without a computer?!

-ee99ee

[Big_John]

Wow, you are young! I'm not that old, and we learned both ways in college.

It was done with manual labor and series of posting methods designed to reduce it and provide checks and balances. And a lot of filing cabinets.

[ee99ee]

Originally posted by Big_John
Wow, you are young!

17. :P

-ee99ee

[plg]

You'd be surprised at the businesses that still don't use computers. For the last 50 years, or so, what is called the One Write system has been used by many. the two most popular are McBee and Safeguard, but there are others sold by NEBS and other mail-order firms.

They use a "board" type system with carbonized checks, receipts, etc. When writing out a check, entering an AP or AR, receipt, etc. you not only fill in the statement, receipt, check, you record the transaction on the underlying sheet.

Then, by running adding machine tapes for the columns and the rows you come up with your various monthly totals which are then posted in a General Ledger.

Quick answer, but many stil do it.

[lustbergcpa]

The sad truth is that the quality of the data in many cases was better when it was done by hand than it is on quickbooks. When people did it by hand, they had to know what they were doing. Or hire someone that did.

With quickbooks, it allows people who know nothing about payroll to process a payroll. Sometimes the data in quickbooks is not worth the CD it is stored on.

A good CPA will still require you bring in hardcopy documents such as loan documents and other relevant data. This will provide checks and balances with the data.

[crazysonoran]

I just think it is sad when I see a business running off some old DOS based system that is holding them back but they dont want to update because it works... If they only knew...

[suzannemead]

I was trying to explain to an apprentice last week about manual accounting. It actually took less paper, had less danger of loss of data and wasn't much more time consuming. Since we have the computer I think we tend to do a lot more, such as detailed reports. Not knocking the computer, but some times I do miss the old tried & true ways. Of couse I am old.

[plg]

Dave, what don't they know? What does QB do today that the old DOS based systems don't?

I was getting as much info, a trial balance, balance sheet and P & L from ZENIX and CP/M systems before DOS was on the market.

I'll admit, I'm not paying someone to sit for a half hour every day backing up to between 30 and 50 5 1/4 inch floppies, but that was a hardware / operating system issue, not the program itself.

Been doing payroll, W-2's etc, for 25 years. Only difference I see is that those terrible old DOS programs allowed me to go in and change the withholding tables myself, rather than pay Intuit a couple of hundred bucks a year. I've done it so often I know it takes all of 10 minutes a year - tops!

I used them as accounting systems, as I still do with QB. I can't really think of one thing QB does today that they didn't do, as far as what I was looking for.

And right now I'm running 99 Pro and getting all I need out of it.

[crazysonoran]

The amount of features in programs has exploded since things moved to a windows based system. Text sizes were set at BIG with DOS, more info can fit on a page now, and it is much more appealing to the eye with the colors and fancy fonts, and things like that. I have been around PC's since DOS 3, have used QB's 3-4-99,2002,2003 and 2004. I wouldnt go back to 3-4-99 again if you paid me. They dont have the features that the newer versions have, and also seem klunky to me now.

[crazysonoran]

I did double entry accounting for 3-4 years when I first started. Even though we documented everything on ledger sheets we used less paper than we did after getting quickbooks. Sure wore out our share of calculators too! :D

[plg]

Instead of fancy fonts and colors I can take the many hundreds of dollars I've saved and buy me some fancy colors. Like a 54" TV. You're not talking accounting, you're talking marketing.

My bottom line is still the same, that's what I'm interested in. Intuit only seems to be interested in theirs. Can't blame them, but I choose not to contribute each year.

If I recall correctly I paid $ 99 at Sams for 99 Pro. I'm getting my money's worth.

[bottlebank]

I was a trainee accountant in the 1950s when computers were what we called people who did calculations and the only mechanical aids were add/listing machines.

I think I can say without fear of contradiction that, in my experience, there is far more paper in offices now than at any time before. There has been talk of the paperless office for at least the last 25 years - I'm still waiting.

[Diceman59]

I still think back to manual methods when trying to figure out how to get an unusual transaction into QB. I still draw out "T" Accounts to see my double entries. There is no change in the theory.

However, I can now do what maybe 3-4 people would do in the good old days and, with QB I can have an up to date set of acounts at the end of each week. (You still need old fashioned knowledge to get the Accruals and Prepayments etc in.)

I can give the MD almost instant figures/breakdowns etc.

Given all that maybe the software costs are not such a rip off !.

And; back in the old days here we accounted in Pounds, Shillings and Pence with 12 pence in a shilling and 20 shillings in a Pound.
That was fun !! And we only changed in (I think) February 1971.

Just checked date - Decimal Day in UK was 15 Feb 1971; Memory is still working !!

[LotusFlower]

I am of the opinion that if you are unable to do your bookkeeping manually (if you had to) you are really NOT a bookkeeper, but a bookkeeper-clerk at best.

[Donatmontana]

Originally posted by lustbergcpa
The sad truth is that the quality of the data in many cases was better when it was done by hand than it is on quickbooks. When people did it by hand, they had to know what they were doing. Or hire someone that did.

With quickbooks, it allows people who know nothing about payroll to process a payroll. Sometimes the data in quickbooks is not worth the CD it is stored on.

A good CPA will still require you bring in hardcopy documents such as loan documents and other relevant data. This will provide checks and balances with the data.

How true. Garbage in is garbage out. There is an inherent danger of people without bookkeeping/accounting knowledge royally messing up their company's books due to gross incompetence. And they don't even know the problems they are creating. It's a much more dangerous world out there today because people think they can simply buy quickbooks and it will handle all transactions "correctly". This is totally false. You still have to know what you are doing and if you don't you are going to get yourself into deep dodo.

[djsnyder]

I must agree that you really learn the basics by doing them on paper. The computer programs do it all for you so much so that even someone with a not so fluent knowledge of accounting can handle. I had a small business for several years and did all my accounting on paper. That's how I learned. Now, getting to know QB is easier because of the foundation I had.

[RL-TX]

Originally posted by ee99ee
How was accounting done before computers? how on earth would you do it without a computer?!

-ee99ee

Check your personal check book if you have one, you will know how to do it then.

Burning accounting data into a cd is a piece of cake, but interpretating accounting data you burn will be a big of cake if you only know to hit some buttons of your keyboard.

[RobJoy]

It's not just bookkeeping, what we all do with QB. Bookkeeping is recording transactions into a double-entry system. Accounting takes over to extract a Trial Balance, Profit and Loss and Balance Sheet, maybe a statement of cash flows. This far, there have applications able to ease the drudgery for donkeys years. But QB isn't just a bookkeeping package, it provides document (sales invoices etc) printing, management accounts, bespoke analysis, customer and supplier databases, inventory control, costing, sales and purchase order processing. The breadth of information available for extraction from a QB company file at a few mouse clicks is astounding, the user is able to squeeze a huge amount out at the price of inputting each transaction just once. Of course, once you and your managers get used to it, you all just demand more.

Less paper in manual bookkeeping days? Maybe, but incomparably less information too.

[davidsmith5]

I'll take Quickbooks any day. In the old days it could take a week to reconcile the checkbook with the bank statement.

With Quickbooks, I can look up an invoice number, a cash receipt, a specific amount of money. I can pull up a customer or a vendor instantly or all items sold within a range of dates. Etc., etc.

Quickbooks is great. I just wish they wouldn't make minor or cosmetic changes and force us to buy a new slower version every three years under threat of termination of support.

[larryaiello]

It definitely helps to know the manual side of things, or at least double-entry accounting.

The more you can learn accounting or bookeeping outside of the computer, the more advantage you'll have when learning Quickbooks, or any other computerized system.

Another thing to mentinon is how great MS Excel is as opposed to using greenbar columnar paper.

Anyone still remember what columnar paper is?

Larry

[suzannemead]

When trying to explain transactions to people using QB I still use the good old green columnar paper and "T" accounts.

[RobJoy]

Theory has it that my company's accountant and I could do all the bookkeeping manually, we both have the knowledge. But we'd have to give up eating and sleeping, and do without the reporting. We could keep a set of strictly accurate accounts for 'official' reporting purposes, but running the company without management reporting of the ease and standard I can get from QB (with Access) would mean making decisions on guesswork! And how would you like to type 400 customer statements every month?

[Joe Williams]

As to using more paper when using QuickBooks. How many remember typing memos ( 5 carbons) and then getting a copy machine to make life easier and save paper. The number of copies went UP because everyone wanted a copy of the memos. The "paperless office" also generated more paper!!
QuickBooks is the same, everyone wants a report because it is easy to get!!

[flagship]

Manual accounting is why so many people have the name Clark (the British equivalent of "clerk" here)...and why there's a clark in every Dickens novel (just kidding...but on second thought, hey, that may even be true!)

It would take an army of accounting clerks to duplicate the volume of reports/invoices/packing slips/etc. that one person can generate now, even thought the purely accounting-related activities require similar amounts of time now as they did then.

Mark Wilsdorf
Flagship Technologies, Inc.
QuickBooks™ Add-Ons and Solutions You Can Use
http://www.goflagship.com

[ceecpa]

Accounting was written down (codified) by Luca Pacioli in 1494 and was performed manually until recently. I still teach students the manual way in a local college because knowing how the information is interrelated is, in my opinion, important to understanding the information.

I've just opened my practice and installed Quickbooks. Although I don't like it yet it seems to be the most popular. I've been using a DOS-based program and it was easy, logical, and unencumbered by unnecessary choices. However, my latest computer won't run it so it's time to move sadly on.....

[RobJoy]

the name Clark (the British equivalent of "clerk" here)

Clerk is the British spelling!

Incidentally 'auditor' is derived from the Latin to listen. I used to remind my father, an auditor, of that, when I was young, when he did the 'Hmmm, really?' thing we all do when our children are prattling.

I think most decent bookkeeping courses teach manual record keeping first - remember T accounts? 'Derive a Trial Balance from the following list of account balances and determine the suspense account balance'. I suppose I could still do it, but, boy, am I glad I don't have to!

[Lisa1111]

I mean think about it. When you take it to your accountant now, you just burn the data file to a CD or something... peice of cake... all that information, in one place... how on earth would you do it without a computer?!

Lisa11

[bgqw09]

Overall, I think it has been an improvement. Why would so many adopt a technology that wasn't helping them? Yes, marketing has something to do with it, but when it comes down to what is more efficient, it's clear that making it electronic is more convenient.

[lud]

Which are the reports or records that businesses have to register formally according to the law in the U.S.? I mean like keeping physical files as an obligation.