Microsoft Excel is a great tool, but when it comes to accounting it has its limitations. Yet according to this article 60% of business use it to manage their finances. Having just bought a company which used Excel it appears at first hand to give you a clear view of what's going in - however cashflow, debtor and creditor days and VAT to name but a few, cannot really be handled without the use of a solution such as Sage or Xero.
Even with such an accounting tool it is important to keep data up to date with your records and not wait for the "once a year" reconciliation by your accountant to see what shape your company is in.
Keeping up to date with your records allows your to "feel" your finances - you only really know what cashflow is when it dries up!
In the UK today there are around 3 million registered businesses. around 60% of these businesses typically use a spreadsheet to manage their finances!, yes that's 1.8 million of you out there using an Excel spreadsheet. Don't get me wrong, I still use Excel to hold large lists of data which I need and as an Accountant, I had to cut my teeth with purchase / sales day books all the way through to creating a set of accounts. I had to know my Debits and Credits and triple check that all my journals were put through correctly. Excel forced me to become a better accountant.