Accounting software is an application or group of applications that records and processes accounting transactions in accordance with the specified rules and regulations and automatically includes each individual transaction entry in the and books such as the trial balance, income statement, and balance sheet. Accounting is a part of life, it is required everywhere, be it at home, business, services, businesses or government departments. The books with information about financial transactions are obligatory.
Accounting software facilitates bookkeeping. This, in many ways, is like software that helps a layman to keep his books that do not have accounting rules. The software helps small to large organizations in book maintenance with ease by processing and recording of themselves and relieves the bookkeeping of repetitive work. Another way is to analyze the accounting data for better and more profitable decisions and to receive warnings for wrong decisions or pitfalls.
Accounting software generally includes modules such as accounts receivable, accounts payable, general ledger, invoicing, inventory, purchase order, sales order, banking book and cash book. These are core modules of the accounting software, but non-core modules may include more options such as collection or pending payments, payment history, expenses, payroll, and so on.
Accounting software can be classified according to their functionality in a few categories. Personal accounting software is intended for simple accounting purposes such as managing budget, expenses, and income for personal accounts. This software also includes reconciliation reports such as banking book and expense report. Inventory accounting software is another category of software with buy and sell options, few of them also have the stock option and use single entry accounting system. This software is very functional and only supports one type of regulation and currency. This software is not designed to be GAAP or IFRS compliant and provides the only accounting as an additional feature of the software.
Accounting software used by mid-sized companies has multiple currencies and multiple control options that allow the user to keep books to international standards. The reporting of this software is robust and scalable using external tools. This software uses scalable and flexible backend databases such as Oracle, Pervasive, MS-SQL, MySQL, etc. Together with this software, management information systems are provided that are supported by capable reporting tools such as Crystal Reports or cognos.
The different categories or types of accounting software are as follows:
a) Small business / personal accounting software designed primarily for home users. They are simple and inexpensive with simple features like budget management.
b) Low-end small business software accounting software that can serve a single national market. Such software is characterized by “single-entry” products.
c) Mid-market accounting software is for companies with large companies. This software can meet the requirements of several national accounting standards and facilitate multi-currency accounting.
d) High-end accounting software is complex and expensive business accounting software, also known as enterprise resource planning or ERP software.
However, you need to keep an eye on certain things before you buy any accounting software, such as the price of the software, its various features, its customer service, and the like. The majority of accounting software includes all major accounting modules. The more specialized features a software has, the more expensive it becomes. Your software features must be compatible with your business. Also, customer service is important as FAQ package, local service center, and others.
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