Main Advantages Of Accounting Software For Business

Enterprise Resource Planning

Name of the Commercial e-Business Application Software

Accounting software consists of computer programs that are useful in bookkeeping in companies. Accounting software assist accountants in recording and reporting firm’s financial transactions, with the functionality of the software differs from product to product. Larger companies may decide to implement a customized solution that can integrate huge amounts of data from different sources. Firms that have not grown often decide on off the shelf products. In modern business, accounting software is an invaluable resource that gives room for detailed tracking of financial transactions as well as immediate reporting and analysis (Romney & Steinbart, 2012).

Description of the Company Using Accounting Software

Accounting software is used in larger companies that use the sales daybook and data entry of sales turnover in various departments. Such companies have the accounts receivable function that is handled by the specialist credit control function within an accounting module. Large companies use sophisticated levels of accounting software where accounting functions include accounts receivable, accounts payable, stock control, general ledger, and fixed assets. The accounting modules in large organizations are also integrated with other functions that are not part of accounting such as production and dispatching of information (Ansari and Euske, 1987).

Small businesses also use the accounting software where the business needs are more than listing of sales invoices, purchase invoice, and bank transactions. The small businesses enter the documents to a database that is automatic and gives room for double entry accounting principles. The small businesses also produces the accounts receivable, accounts payable, and general ledger databases. Small limited companies are obliged to obtain accounting software based upon the accounting principles to show some level of accuracy and integrity of the financial records. Such companies that use the accounting software often use a balance sheet for reporting purposes.

Purpose of Using Accounting Software

Accounting software is meant to store business transactions into various accounts that are designated by type of transaction and category. The software records general ledger transactions that include both income and expenses. The software is used by accounting professionals who have clear understanding of the general ledger accounting. The software is also meant to be used by business owners who have the basic accounting knowledge. The software is also significant for use in industries. The accounting software eliminates redundancy that often existed in accounting functions. At the touch of a button, the software generates complex financial statements. The software manufactures provide trial versions to their users who intend to lack insight on accounting functions (Kerremans, Theunisse and Van Overloop, 1991).

Main Functionalities of the Accounting Software

Accounting software is often used in businesses to supply the necessary members of staff with timely and accurate data. For instance, if a company’s finance director is in need of a cash flow report that is to be used in an argent meeting. The software is meant to enable users to create a type of report by filling in forms by the click of a button. Accounting software is vital in filling business taxes that are required to keep close track of the business. The process is made easier by guaranteeing that all the information required is at one place. Other companies have gone a step further to produce tax return software that integrates with other accounting functions (Kerremans, Theunisse and Van Overloop, 1991).

Types of Data used in Accounting Software

Accounting software makes use of business and sales records, legal paper works that are often useful in offices. Data that is recorded in receipts, invoices, bills, and expenses are all included in the software for tabulation and presentation. Data involving money transactions that are often recorded in the balance sheet as well as profit and loss account is also useful in the accounting software.

Impact of the Accounting Software on Business Performance

The accounting software increases accuracy in business records by reducing or getting rid of human errors in calculation. A lot of errors are witnessed when manual bookkeeping is involved in making mathematical calculations by hand. Mathematical errors often have greater impact on the end balance. Computers, through the accounting software are incapable of making such errors. However, the software is not immune to mistakes that might arise from data entry and interpretation of mistakes.

Speed is enhanced by the use of the accounting software as businesses can process their accounts with greater speed than that of manual processing. The speed comes because of the use of computers that are able to process figures faster than humans. The software also enhances efficiency through automation of the transactions. The accounting can be configured to do the entries as required. High speed in the accounting operations is also significant in reducing the overall costs. Computers perform function that could have been done by many employees; thus, reducing costs (Neely &Andy, 2002).

Type of Output and Reports Generated by the Accounting Software

Accounting software generates reports that are useful in business meetings for decision making. Finance directors find useful data from the accounting software, which they use to provide the necessary members of staff with timely and accurate information. Tax reports of the business and payment invoices are also generated from the accounting software to assist in the management of businesses.