Which is an advantage of using accounting software?

Financial statements can be produced automatically. The software builds reports from the entries.

Which is a risk of keeping records only on paper?

They can be destroyed by fire or flood. And there may be no copy.

Which storage method lets data be reached from any location?

a cloud service. It needs only an internet connection.

Which is a disadvantage of a cloud service?

An internet connection is needed. There is also a continuing cost.

Storing records digitally in place of paper files is more sustainable because:

less paper and physical space are used. Sustainability is about using fewer resources.

Technology and the storage of accounting data

In plain words

Most book-keeping is now done with software, not in bound ledgers. That brings speed and accuracy, and a new responsibility: accounting data has to be kept safe, and kept in a way that does not waste resources.

7 things to know

Digital applications, such as accounting software and spreadsheets, can be used for all or part of the accounting records. They are fast and accurate, and they produce reports and financial statements automatically.
Accounting data must be stored safely. It is needed to prepare financial statements, it has to be kept for a number of years by law, and it is confidential.
Storing data sustainably means using less paper, energy and physical space.
The risks of poor storage: data can be lost through fire, flood, theft or a hardware failure; confidential information can be seen or stolen; and the business may be unable to prepare its accounts or prove what it is owed.
Manual storage (paper files): needs no equipment or electricity, but takes up space, is slow to search, uses a lot of paper, and can be destroyed by fire or flood.
Data storage devices (such as external hard drives and USB drives): cheap and portable, and can be kept as a backup, but can be lost, stolen or damaged.
Cloud services: the data can be reached from anywhere, backups are automatic, and space can be increased easily. But an internet connection is needed, there is a continuing cost, and the business depends on the provider's security.

Worked example

A small business keeps all its accounting records on one laptop in the office. Describe the risk and suggest an improvement.

Everything is in one place. If the laptop is stolen, breaks or is destroyed in a fire, all the records are lost.
Improvement: keep a backup somewhere else. A cloud service would back the data up automatically and keep it away from the office.
The laptop and the cloud account should be protected with passwords, because the data is confidential.

Tips and tricks

"Safely" is about loss and about confidentiality. "Sustainably" is about paper, energy and space. Questions may ask for either.
Every storage method has both advantages and disadvantages. Be ready to give one of each for manual files, storage devices and cloud services.

5 questions, about 2 minutes.

It lands in your notebook with its questions as flashcards.

Technology and the storage of accounting data: 5 questions and answers

These are the quiz’s questions. Do the quiz first, then come back here for the ones that got you.

Which is an advantage of using accounting software?
- No training is needed.
- Financial statements can be produced automatically. (the answer)
- It never needs backing up.
- It removes the need for business documents.
The software builds reports from the entries.
Which is a risk of keeping records only on paper?
- They need electricity.
- They can be destroyed by fire or flood. (the answer)
- They can be hacked over the internet.
- They need a subscription.
And there may be no copy.
Which storage method lets data be reached from any location?
- paper files
- a USB drive kept in a drawer
- a cloud service (the answer)
- a ledger book
It needs only an internet connection.
Which is a disadvantage of a cloud service?
- Data cannot be backed up.
- An internet connection is needed. (the answer)
- It takes up office space.
- It uses a lot of paper.
There is also a continuing cost.
Storing records digitally in place of paper files is more sustainable because:
- computers are cheaper than paper
- less paper and physical space are used (the answer)
- digital records cannot be lost
- no electricity is used
Sustainability is about using fewer resources.

5 questions

Tap an answer and you’ll see straight away whether it’s right, and why.

Worksheet

2 questions, 6 marks. Write your answers on paper, then check them.

Technology and the storage of accounting data

Cambridge IGCSE Accounting 0452 · 6 marks · papermunch.org

Name ______________________________ Date ______________

State two risks of not storing accounting data safely.[2]
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The data could be lost, for example in a fire or if a device fails. Confidential information could be seen or stolen by other people.
I got this one
State one advantage and one disadvantage of storing accounting data in paper files, and one advantage and one disadvantage of using a cloud service.[4]
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Paper: no equipment is needed, but the files take up a lot of space. Cloud: the data can be accessed from anywhere, but an internet connection is needed.
I got this one

Answers: Technology and the storage of accounting data

1. The data could be lost, for example in a fire or if a device fails. Confidential information could be seen or stolen by other people.
2. Paper: no equipment is needed, but the files take up a lot of space. Cloud: the data can be accessed from anywhere, but an internet connection is needed.