What is Accounting Software?
Definition: Application software that records and processes accounting transactions.
Accounting application software functions as an accounting information system.
Sometimes it is developed by the company using it, at times it may be purchased from a third party, or may be a combination of a third-party application software package that contains certain modifications to tailor to certain customers or needs.
Modules within the Software
A standard accounting software consists of a variety of modules; different sections that deal with certain areas of accounting.
There are core modules which are common to almost every accounting software:
- Accounts receivable—where the company enters money received
- Accounts payable—where the company enters its bills and pays money it owes
- General ledger—the company's "books"
- Billing—where the company produces invoices to clients/customers
- Stock/Inventory—where the company keeps control of its inventory
- Purchase Order—where the company orders inventory
- Sales Order—where the company records customer orders for the supply of inventory
- Cash Book—where the company records collection and payment
Non-core or Add-on Modules are often integrated based on needs:
- Debt Collection—where the company tracks attempts to collect overdue bills (sometimes part of accounts receivable)
- Electronic payment processing
- Expense—where employee business-related expenses are entered
- Inquiries—where the company looks up information on screen without any edits or additions
- Payroll—where the company tracks salary, wages, and related taxes
- Reports—where the company prints out data
- Timesheet—where professionals (such as attorneys and consultants) record time worked so that it can be billed to clients
- Purchase Requisition—where requests for purchase orders are made, approved and tracked.