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Difficulty: MediumComparison of Manual and Computerized Accounting Systems

Although computerized accounting software automatically performs ledger balancing and trial balance extraction to eliminate arithmetic calculation errors, it does not prevent accounting errors resulting from incorrect data originally captured on source documents.

Answer: Answer

Answer

The statement is True.
The statement is true because automation in computerized accounting guarantees mathematical accuracy during processing and posting, but it remains dependent on human input. Under the Garbage In, Garbage Out (GIGO) principle, if erroneous figures are keyed in from source documents, the resulting financial reports will be inaccurate regardless of software sophistication.

Step-by-Step Solution

1
Analyze the impact of system automation on mathematical processing.
Computerized accounting software automatically calculates ledger totals, posts double entries, and extracts trial balances, which eliminates human arithmetic calculation errors.
Automated code executes mathematical routines consistently and accurately.
2
Evaluate the effect of initial data entry on accounting outputs.
Errors present on source documents or introduced during keyboard entry are processed without detection by the system's calculation engine.
This behavior exemplifies the Garbage In, Garbage Out (GIGO) principle inherent in data processing.
3
Compare manual and computerized system vulnerabilities regarding input accuracy.
Both manual and computerized accounting systems remain equally dependent on accurate source document inputs.
Neither system can automatically validate the underlying factual accuracy of external source documents without separate internal control checks.

Key Concept

Garbage In, Garbage Out (GIGO) and Error Elimination in Computerized Accounting
Estimated Time:1m 0s
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Comparison of Manual and Computerized Accounting Systems