Accounting software

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Accounting software is application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll, and trial balance. It functions as an accounting information system. It may be developed in-house by the company or organization using it, may be purchased from a third party, or may be a combination of a third-party application software package with local modifications. It varies greatly in its complexity and cost.[1] The market has been undergoing considerable consolidation since the mid 1990s, with many suppliers ceasing to trade or being bought by larger groups.
Contents
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1 Modules 2 Implementations 3 Categories

o o o o o o

3.1 Personal accounting 3.2 Low end 3.3 Mid market 3.4 High end 3.5 Vertical market 3.6 Hybrid solutions

4 History 5 See also 6 References

[edit]Modules
Accounting software is typically composed of various modules, different sections dealing with particular areas of accounting. Among the most common are:[2][3][4][5] Core modules

Accounts receivablewhere the company enters money received Accounts payablewhere the company enters its bills and pays money it owes

General ledgerthe company's "books" Billingwhere the company produces invoices to clients/customers Stock/inventorywhere the company keeps control of its inventory Purchase orderwhere the company orders inventory Sales orderwhere the company records customer orders for the supply of inventory

Non-core modules

Bookkeepingwhere the company records collection and payment

Debt collectionwhere the company tracks attempts to collect overdue bills (sometimes part of accounts receivable)

Electronic payment processing Expensewhere employee business-related expenses are entered Inquirieswhere the company looks up information on screen without any edits or additions

Payrollwhere the company tracks salary, wages, and related taxes Reportswhere the company prints out data Timesheetwhere professionals (such as attorneys and consultants) record time worked so that it can be billed to clients

Purchase requisitionwhere requests for purchase orders are made, approved and tracked

Reconciliationcompares records from parties at both sides of transactions for consistency

Different vendors will use different names for these modules.

[edit]Implementations
In many cases, implementation (i.e. the installation and configuration of the system at the client) can be a bigger consideration than the actual software chosen when it comes down to the total cost of ownership for the business. Most midmarket and larger applications are sold exclusively through resellers, developers and consultants.[citation needed] Those organizations generally pass on a license fee to the software vendor and then charge the client for installation, customization and support services. Clients can normally count on paying roughly 50-200% of the price of the software in implementation and consulting fees.[citation needed]

Other organizations sell to, consult with and support clients directly, eliminating the reseller.

[edit]Categories [edit]Personal

accounting

Mainly for home users that use accounts payable type accounting transactions, managing budgets and simple account reconciliation at the inexpensive end of the market.

[edit]Low

end

At the low end of the business markets, inexpensive applications software allows most general business accounting functions to be performed. Suppliers frequently serve a single national market, while larger suppliers offer separate solutions in each national market. Many of the low end products are characterized by being "single-entry" products, as opposed to doubleentry systems seen in many businesses. Some products have considerable functionality but are not considered GAAP or IFRS/FASB compliant. Some low-end systems do not have adequate security nor audit trails.

[edit]Mid

market

The mid-market covers a wide range of business software that may be capable of serving the needs of multiple national accountancy standards and allow accounting in multiple currencies. In addition to general accounting functions, the software may include integrated or add-on management information systems, and may be oriented towards one or more markets, for example with integrated or addon project accounting modules. Software applications in this market typically include the following features: [citation needed]

Industry-standard robust databases Industry-standard reporting tools Tools for configuring or extending the application (e.g. an SDK), access to program code.

[edit]High

end

The most complex and expensive business accounting software is frequently part of an extensive suite of software often known as Enterprise resource planning or ERP software. These applications typically have a very long implementation period, often greater than six months. In many cases, these applications are simply a set of functions which require significant integration, configuration and customization to even begin to resemble an accounting system.

The advantage of a high-end solution is that these systems are designed to support individual company specific processes, as they are highly customizable and can be tailored to exact business requirements. This usually comes at a significant cost in terms of money and implementation time.

[edit]Vertical

market

Some business accounting software is designed for specific business types. It will include features that are specific to that industry. The choice of whether to purchase an industry-specific application or a general-purpose application is often very difficult. Concerns over a custom-built application or one designed for a specific industry include:

This can be weighed up against:

Smaller development team Increased risk of vendor business failing Reduced availability of support

Less requirement for customization Reduced implementation costs Reduced end-user training time and costs

Some important types of vertical accounting software are:

[edit]Hybrid

Banking Construction Medical Nonprofit Point of Sale (Retail) Daycare accounting (a.k.a. Child care management software)

solutions

As technology improves, software vendors have been able to offer increasingly advanced software at lower prices. This software is suitable for companies at multiple stages of growth. Many of the features of Mid Market and High End software (including advanced customization and extremely scalable databases) are required even by small businesses as they open multiple locations or grow in size. Additionally, with more and more companies expanding overseas or allowing workers to home office, many smaller clients have a need to connect multiple locations. Their options are to employ software-as-a-service or another application that offers them similar accessibility from multiple locations over the internet.

Accounting in computerised environment.ppt Presentation Transcript

1. INTRODUCTIONThe first and foremost thing in accounting in computerized environment is that the fundamental of accounting does not change.As the recording medium is something else compared to hard copy, certain precautions, methodologies and techniques are to be adopted while maintaining accounts in a computerized environment. 2. Salient features of computerizedaccounting system.1. The processing of financial information will be by one or more computers.2. The computer or computers may be operated by the entity or by a third party.3. The processing of financial information by the computer is done with the help of one or more computer software.4. A computer software includes any program or routine that performs a desired function or set of functions and the documentation required to describe and maintain that program or routine. 3. 5. The computer software used for the accounting system may be an acquired software or may be developed for the business.6. Acquired software may consist of a spread sheet package or may be prepackaged accounting software. Larger organizations may use an Enterprise Resource Planning (ERP) package developing a customized accounting package Accounts can be maintained in a computerized environment even by using a spreadsheet package. But the user will have to use his knowledge and skills of spreadsheet software to keep control of the figures. 4. Accounting packages andconsideration for their selection Accounting software as a part of Enterprise Resource Planning(ERP) Customised Accounting Software Prepackaged Accounting Software5. Types of Accounting Software There are several prepackaged accounting software which are available in the market and are used extensively for small and medium sized organizations. These softwares are easy to use, relatively inexpensive and

readily available. Once the basic parameters are set and the master files are updated, the system is ready for use6. Prepackaged accounting software 7. Advantages of Prepackagedaccounting software1.Easy to install2.Ralatively inexpensive3.Easy to use4.Backup Procedure is simpler5.Certain flexibility of report formats provided by some of the softwares6.Very effective for small and medium size businesses 8. Disadvantage of Pre-packagedAccounting Software1. Does not cover peculiarities of specific business.2. Does not cover all functional area.3. Customisation may not be possible in most such software.4. Reports generated is not sufficient or serve the purpose.5. Lack of security.6. Bugs in the software. A customized accounting software is one where the software is developed on the basis of requirement specifications provided by the organization. 9. Customised accounting software 10. Advantages of a CustomizedAccounting Package1. The functional areas that would otherwise have not been covered gets computerized.2. The input screens can be tailor made to match the input documents for ease of data entry.3. The reports can be as per the specification of the organization.4. Bar-code scanners can be used as input devices suitable for the specific needs of an individual organization.5. The system can suitably match with the organizational structure of the company. 11. Disadvantages of a CustomizedAccounting Package1. Requirement specifications are incomplete or ambiguous resulting in a defective or incomplete system.2. Inadequate testing results in bugs remaining in the software.3. Documentation is not complete.4. Frequent changes made to the system with inadequate change management procedure resulting in system compromise.

12. 5. Vendor unwilling to give support of the software due to other commitments.6. Vendor not willing to part with the source code or enter into an escrow agreement.7. Control measures are inadequate.8. Delay in completion of the software due to problems with the vendor or inadequate project management.

An ERP is an integrated software package that manages the business process across the entire enterprise13. Accounting software as part ofenterprise resource planning (ERP)

14. Advantages of using an ERP1. Standardised processes and procedure and procedures.2. Standardised reporting.3. Duplication of data entry is avoided as it is an integrated package.4. Greater information is available through the package.

15. Disadvantages of an ERP1. Lesser flexibility.2. Implementation hurdles.3. Very expensive.4. Complexity of the software.

16. Choice of an ERP1. Functional requirement of the organization2. Reports available in the ERP.3. Background of the vendors.4. Cost comparisons,

17. ConclusionThe accounts which were earlier maintained in a manual form will be gradually replaced with computerized accounts. The critical factors, mentioned above, should be carefully considered. Well-utilised computerised systems could bring amazing benefits for the enterprise, but badly utilised, certainly, could be a disaster as well. An enterprise should select the most appropriate operational system to run, rather than an advanced system, which is not design for them.