Accounting is the process of recording, analyzing and summarizing the financial transactions in a significant manner and interpreting the results. And accountancy is the process of making available the financial information to the users of it, like share holders and managers to make important financial decisions.

Meaning

Accounting software is software that records the various financial transactions according to its modules or categories like accounts payable, accounts receivable, payroll, profit and loss and balance sheet. It is the store house of all accounting information. Accounting software can be developed by the company as per its needs or it can be purchased by various third parties who have designed software for the same purpose.

Purpose

It depends on the size of the business and the purpose and product to decide on the accounting software to be used by the company. It is very complex and the cost of it varies depending on the functions that have to be present in the software to make full use of it.

Accounting software is designed based on the various modules of accounting, as the main purpose of it is to record all the financial transactions. And financial statements are to be prepared in accordance to accounting standards, so it is designed based upon accounting modules so that the financial statements derived using it is according to Accounting Standards and is directly made available for the various users of it like directors, managers and shareholders.

Utlities

Accounting software is based upon different modules of accounting, some are core modules while some are none core modules. Core modules include account receivables wherein the money received by the company is recorded and account payable which records the money paid by the company. It also includes General ledger, purchase orders, sales orders, and cashbook.

Accounting software includes some non-core modules too ranging from debt collection in which the company tries to carry the bills that are due. It includes expenses where employee related expenses are entered, payroll where salaries of employees are calculated. It also helps in maintaining time sheets where the time of employees entrance and exit is recorded to calculate wages for daily workers.

Implementation

Most of the times the implementation of accounting software is much more difficult than installation and configuration of the same. The cost of implementing the software is much higher than the cost of buying and installing the same. Most accounting software are sold by the resellers and that increase the cost of implementation too. So it is better to go in for the companies that eliminate the resellers and sell directly to the clients.

Category

Accounting software depends upon the utility required by the client. The software is categorized like the one for personal accounting, low-end business package, middle-end, high end, vertical process that is like banking, medical field, and hybrid solutions. Hybrid solution is the software with advanced technology in the market and is suitable for a company with the most complex accounting requirements.

The utilities of accounting software has made it a need for every company and business to employ it, now manual accounting is hardly seen in any company, because customized software can be made for any kind of business and advanced accounting software is available for big companies which needs high-level software and needs to present a detailed report to all the users of financial statements.