What is Accounting Software
- December 31, 2018
- Posted by: Diksha Jain
- Category: Finance & accounting
Accounting Software: Definition
Accounting software is a kind of computer software that is used by accounting professionals in order to manage their accounts, perform accounting operations efficiently and quickly. Under the same roof, it gathers all systems and applications committed to manage and process the financial data.
Features of accounting software like accounting and bookkeeping services are especially used by accounting professionals and bookkeeping teams to govern accounts and make the process of systematic operations in an automated mode. There is a need for accounting software for many It can record accounting data, measure indicators, and report the financial activity of the company.
Accounting Software: A Systematic Practice
Accounting is the systematic practice as well as a process of communicating and recording financial information. In business, this systematic procedure is adopted for both internal and external audits. It is also required in the financial analysis to satisfy the legal or internal managerial needs.
The process of accounting may also involve systematic and diverse measurement, classification, verification, summation, and financial information interpretation. The list of accounting software may vary from simple, single-entry programs to more sophisticated, double-entry systems. Single-entry systems are used to keep records of accounting and double-entry systems can process accounts receivable, accounts payable, payroll and inventory and many other functions.
Accounting Software: Main Functions
A question may arise in your mind why use accounting software and what is the importance of accounting software? You will get your answer by reading the functions explained below:
General Ledger is one of the organization’s main accounting books. It is considered as the record that documents the financial transactions of business completely. It contains the account information required to prepare financial statements. It also includes accounts for assets, owners’ equity, liabilities, revenues, as well as expenses.
It enters bills and pays out money to the creditors owning it. For example suppliers or overheads.
It enters money which is received from debtors like clients or customers.
It handles invoices to customers for goods and services. Billing involves three tasks starting from collecting the information needed for an invoice, creating invoices, and finally issuing them to customers.
It records the current stock levels of business in order to ensure the complete maintenance of the efficient stock.
Purchase orders can be created by accounting software. Purchase orders are the commercial documents that are issued to sellers. It indicates types, quantities, and prices agreed for products or services.
You can create sales orders i.e, confirmation documents sent to customers before the delivery of the goods or services. Accounting software also allows you to record the customers’ orders.
It plays an important role in keeping records of the financial affairs of a company using finance software. The transactions need to be identified, approved, sorted in a manner that they can be retrieved and presented in the company’s financial statements, other reports as well.
Accounting Software: Examples
QuickBooks – QuickBooks is the topmost accounting software available in several different editions. It satisfies the accounting needs of any company. It offers a vast array of organizational capabilities that can help companies to organize and manage the accounting data well.
FreshBooks – It’s a fully-featured client invoicing and time-tracking system that is used by more than 5 million businesses worldwide. FreshBooks is ideal for freelancers as well as small businesses who search to track their sales cycle at a fast rate and keep their processes following the standards and regulations. It is well integrated and mobile friendly.
Xero – Xero manages different accounting operations as preferred by sole accountants as well as small business teams. A competent accounting management system working in line with businesses’ priorities manages money in and out of their budgets in a manner coinciding with their goals and long-term missions.