Accounting system is the system which manages the financial position of a business. An accounting system allows business to manage all types of financial transactions like income, expenditure, purchase, sales and other financial activities. With the help of this accounting system, management prepared a comprehensive statistical report for which result in good decision making.
In 20th century, development in computer technology, company generally used computerized and automated software for accounting which makes accounting easy.
OBJECTIVES OF AN ACCONTING SYSTEM-
- TO KEEP SYSREMATIC RECORDS- Under this system, all the financial transaction is systematically recorded which helps to control misuse of fund. It also provides financial information whenever needed.
- TO SUPPLY FINANCIAL DATA AND INFORMATION- Accounting system provides various financial information data and information for the preparation of financial statements.
- TO PROVIDE INFORMATION ABOUT FUNDS- For proper utilization of fund, authorities know about the status of various funds. It provides information about position of fund.
- TO SAFEGUARD PHYSICAL PROPERTY- Accounting system helps to maintain the proper recording of public properties.
- TO MAINTAIN EFFECTIVE CONTROL OVER BUDGET- The government prepares budget for making expenditure in different sector. According to new accounting system every government office makes budget according to budgetary limit.
- TO MAKE AUDIT EASIER- Data and information provided in this system, helps to make an audit more simple and easy.
- TO PROVIDE REILABLE INFORMATION FOR PLANNING AND DECISION MAKING- Government has to make important financial policies and decision making. Accounting system provides financial information for policies and decision making.
BENEFITS OF USING ACCOUNTING SOFTWARE-
- Accounting system helps in managing cash flow effectively.
- Helps in predict the correct cash flow of business.
- Control the business activities with the help of accounting software.
- Simplifies the banking experience comfortably.
- Helpful in financial decision making.
TYPES OF ACCONTING SOFTWARE-
Accounting system helps to collect the financial information of business. Before deciding which software is suitable, it is important to understand the different types of software and for which purposes this software is to be used. The list of different software is below-
- SPREADSHEETS-
Quite small businesses use this electronic software called spreadsheet for accounting software. This software is inexpensive and prone to error, since information entered may be in wrong place. Usually spreadsheet software is used by the small organization which has low transaction volume. Each cell in this software contain either numeric or text data, or results of formulas automatically calculate and displayed on the cells. Modern spreadsheet software can have multiple sheets, which displays data either in numeric or in graphical form.
- COMMERCIALLY OFF-THE-SHELF SOFTWARE-
COTS or Commercial off the shell software is accounting software used in all over the world. It is customized to the needs of business, contains many layers of error detection which reject the entries of incorrect information and produces standard reports for the needs of user. There are certain COTS packages that are similar to certain industries, with more features to address the target market. COTS software requires consultant services to install, and have lengthy installation process as well as staff to maintain the software. The use of COTS has been commanded across many business and government events.
- ENTERPRISE RESOURCE PLANNING SOFTWARE [ERP]-
ERP [ENTERPRISE RESOURCE PLANNING] is integrated management software of main business processes, and medicated by software and technology. ERP is management software for business or a set of integrated applications, that an organization use to manage, collect, store and interpret data from different business activities. Enterprise resource planning software provides latest updated views of business using database, maintained by database management system. This software shares data among various departments such as purchase, sales, manufacturing, accounting etc. and maintain connection with stakeholders by flow of information. Enterprise system supports variety of business functions, though it focuses on big enterprises, small enterprises started using this software.
- CUSTOM ACCOUNTING SOFTWARE-
Custom software is specially designed for specific organizational task or other use. It is also known as bespoke or tailor-made software. Large companies use this software for functions like content management, inventory management, customer management, human resource management. This software may consider expensive as compared to off-the-shelf. Custom software generally proves to be most efficient system as it provides support for specific needs of the business, which is not available in off-the-shelf software.
Custom software used in major fields-
. In construction work
. In hospitals
. Places of education
. In retail
Modern custom accounting software tool tracks your business financial activities and makes business runs smoothly.
Accounting software makes easy to perform and manage financial activities of business, helps in performing task correctly. It does not replace the role of accounting managers, but instead of this it helps in increase their productivity. In absence of accounting software, accounting managers or business owners have to spend too much time to maintain financial records. This software helps in clear vision of company financial position.