Accounting software is an application or set of applications that records and processes accounting transactions according to established rules and regulations and automatically brings each and every transaction entry into the final books such as trial balance sheet, income statement and balance sheet. Accounting is a part of life, it is needed everywhere be it home, business, service, company or government. The books with information on monetary transactions are obligatory.
Accounting software makes it easier to keep business books. This is done in a number of ways, such as software that helps a layperson who has no knowledge of accounting rules to keep their books. Software helps small to large businesses keep books easily by doing the processing and recording themselves, relieving the accounting department of repetitive work. Another option is to help analyze the accounting data for better and profitable decisions and receive alerts for wrong decisions or pitfalls.
Accounting software generally includes modules such as accounts receivable, accounts payable, general ledger, invoicing, inventory, purchase order, sales order, bank ledger, and cash journal. These are core modules of the accounting software, however non-core modules may include other options such as collections or pending payments, payment performance, expenses, payroll, etc.
Accounting software can be divided into a few categories according to its functionality. Personal accounting software is intended for simple bookkeeping purposes such as managing budget, expenses, and income for personal accounts. This software also includes reconciliation reports such as bank ledger and expense report. Inventory accounting software is another category of software used with sell and buy options. Few of them also have stock options and use a single entry system for bookkeeping. This software is very minimal in terms of functionality and only supports one type of regulation and currency. This software was not developed with GAAP or IFRS compliance and only provides accounting as an additional feature with the software.
Accounting software used by medium-sized businesses has multiple currency and regulatory options that allow the user to keep books according to international standards. The reporting of this software is robust and scalable by using external tools. This software uses scalable and flexible databases on the backend such as Oracle, Pervasive, MS-SQL, MySql, etc. Management information systems are provided together with this software, supported by powerful reporting tools such as Crystal Reports or Cognos.
ERP financial software are more advanced versions of accounting software used by medium-sized businesses. The benefit of using such software is that it can be customized to meet users’ needs and requirements without compromising compliance with IFRS or GAAP, while maintaining the accuracy and speed to transmit critical information and analysis. Large organizations may only need to introduce a few policies to run smoothly or to cover the pitfalls. This software adapts to such changes so that its users can work freely with the same flexibility. Some accounting software is designed specifically for a specific industry, solving industry-specific problems and offering advanced features like data security and privacy. Such software is used by banks, financial institutions and government agencies. This software is flexible enough to also adapt more easily to changing rules and regulations.