Meaning and definition of Accounting Software
Accounting software is, basically, application software, which records and processes accounting transactions occurring within functional modules like accounts payable, payroll, accounts receivable, and trial balance. The accounting software works as an accounting information system.
This software can be developed in-house by the company or organization making its use. However, this software can also be purchased from a third party, or might also be a grouping of a third-party application software package along with local modifications. The accounting software differs greatly with regards to cost and complexity.
Modules of Accounting Software
The accounting software generally includes various modules, distinctive sections dealing with specific areas of accounting. The most common ones include:
1. Core Modules
i. Accounts payable
ii. Accounts receivable
iv. General ledger
v. Purchase order
vii. Cash book
viii. Sales order
2. Non-core Modules
i. Debt collection
iii. Electronic payment processing
Categories of accounting software
The main categories of accounting software are:
- Personal accounting software is used mainly by home users dealing in accounts payable type transactions, supervising budgets, and simple account reconciliation at the reasonably priced end of the market.
- Low end accounting software allows most basic accounting functions to be performed at the low end of the business markets.
- Mid market accounting software allows accounting in multiple currencies in the mid market covering a wide range of business software which is capable of fulfilling the requirements of multinational companies.
- High end accounting software featuring a long implementation period, generally higher than six months.
- Vertical market accounting software, designed for specific business types, this accounting software type includes features that are unambiguous to that industry.
- Hybrid solutions, increasingly advanced software, it is best suited for companies at multiple stages of growth.
Implementations of Accounting Software
In various cases, implementations (i.e. the configuration and installation of the system at the client) can be a larger consideration than the actual software selected when it comes down to the overall cost of possession for the business. Many midmarket and bigger applications are sold out exclusively through resellers, consultants, and developers. These organizations usually pass on a license fee to the software seller and then the client is charged for installation, customization, and support services.
There is also a type of software which is not accountant but very useful in some tasks close to accentuating tasks. The example of such software is ReadyRatios financial analysis software.