Accounting Software Grows Up

Question: Discuss about the Accounting Software Grows Up. Answer: Introduction The lifeline of every business organisation is accounting. Accounting is the process of classifying, recording, measuring, identifying, summarizing, verifying, communicating and interpreting the financial information. Accounting software processes the accounting transaction within its functional module. Profit and Loss Statement, Balance Sheet and the Statement of changes in the Financial Statements are together known as the Financial Statements of the company. Accounting software makes it very easy and a convenient way of preparing the Financial Statements of an entity. Accounting software consists of various function modules such as General Ledger which contains the details of the financial transactions of the entity, Account Payable which contain the details of the money company owes to pay to its creditors or suppliers, Accounts Receivables which contains the details of the money which people owes to the company, etc. There are various different types of accounting packages available for an entity depending upon the requirements of the business. For small business enterprises, there are small business or personal accounting packages which are less expensive and user friendly. This software generally possess simple functioning like budget management and is suitable for smaller business market and they are capable of serving only a single national market. The personal accounting software is basically a single entry product. In addition to personal accounting software mid marketing accounting software are also available. Such software are adopted by the large business organisations as it can serve the need of accounting in multiple currencies and can also adapt accounting standards of multiple nations. History of Accounting Software Earlier, the general ledger was the most commonly used method for accounting. General ledger is a basically a book designed in such a way that there are separate pages for each account such as cash account, equity account, asset account, receivables account, payables account, etc. All the daily transactions were entered manually into the general ledger. This continued till 1980s. Later, in 1983, Intuit developed the first computerised accounting package Quicken for personal finance. Subsequently, various other accounting software such as Turbo Tax for facilitation of calculation of income tax and federal taxes and Quick Book for the purpose of small and medium size business accounting were made available to a large number of customers were launched. Eventually, the manual journal entries started vanishing and the computer based accounting software or packages made the job of the accountant very easy. Accounting software or packages facilitated the professional accountants to perform their job more efficiently, conveniently and swiftly. [1] In the recent years, there has been an excellent advancement in the technology, the business enterprises have adopted personal computers for facilitating the functioning of the business enterprises. Intuit was established in 1983 which played a very crucial role in the modernisation of accounting for that period. The soft wares developed by Intuit were amazing, and the most common software which was accustomed all over the world was Quick books. The accounting software packages commonly used in Australia are: Intuit Quick Books MYOB Reckon Saasu Xero Among all of the above software packages available Intuits Quick Books is the most popular accounting software package used by the small business enterprises in Australia. The first and the foremost reason for adopting the Quick Books is its reasonable price and the second reason is the features provided by the Quick Books. The owners of commercial enterprises used Quick Books for tracking their cost, income and profits all over Australia. MYOB is also a popular accounting software package that is available in Australia. It is advance than the Quick Books, the simple functioning accounting software. This software was considered as a program which was designed from very basic for carrying out daily accounting functions. In addition to basic accounting functioning, MYOB was also considered as a structure which helped the commercial enterprises in increasing their profitability and helped in real time decision making for the economic operations of the commercial enterprises. MYOB is much more than just an accounting software package for the business enterprises of Australia. MYOB Kounta interface facilitates the integration of Factor of sale (POS) transactions with the operation of whole business enterprise. Reckon is a high quality accounting software for the business enterprises, book keepers and the accountants in Australia. Reckon which is an accounting software basically developed for small enterprises is more popularly known as cloud accounting software packages for the small and medium size enterprises due to lower costs. Through Reckon Pay (price manner interface) the debit card or the credit card bills can be received on the mobile phones. [2] The market size of various accounting software packages Identifying the market share of various accounting software packages in the country is a very difficult task. With reference to the small business administrators, the distribution has changed drastically in the last decade. Xero has approximately 65% of the market share in Australia; Sage 50 has approximately 10% of the market share, 20% of the market share is occupied by Intuits Quick books and the other accounting software packages occupied 20% of the market share in Australia. [2] The current gaps or challenges encountered by the users or the customers of accounting software packages Despite of all the advantages of accounting software packages facilitating the ease of doing business, but an accounting software package is not the best idea for every small business. Before implementing the accounting software packages in the business one should consider the various disadvantages of the accounting software packages. The challenges encountered by the users of accounting software packages are: [3] Cost: Though the small accounting software packages are reasonable, but the cost of software is not the sole cost involved in using the software. In addition to the cost of software, the minimum standards in relation to the requirements of the software such as the RAM of the computer, memory of the processor and the hard drive are also to be considered. In comparison to the backup of an excel sheet, taking the backup of accounting data may require more space. The technical support required for the accounting software may also cost extra to the company and many a times, annual licensing fees is to be incurred for upgrading the software. Some accounting software packages may also require skilled personnel and if the required personnel is not available within the business enterprise, additional cost of hiring the consultant is also to be incurred. Difficulty: Although the accounting software packages are developed in a user friendly manner, but still there is a learning curve involved in the conversion to any software package. For a new user the accounting terms, layouts and the determination of the proper setup may be more difficult. Time: Processing the expenses and invoices of the accounting software is more time consuming than the simple entry of the expense in a ledger or spreadsheet software and creating manual invoices or invoices based on spreadsheet software. For a person who is not using computer regularly, the time required in processing the daily financial transaction may overrule the benefits derived from the accounting software packages. Maintenance: Maintenance of the accounting software is a complex task. It does not only includes the upgradation of the accounting software package but also includes the maintenance and upgradation of all the necessary equipment essential for the utilisation of accounting software as many a times upgraded version of accounting software packages may also require the upgradation of the equipment. If business enterprises are not interested in spending a lot of money in the equipment, then in such a case it is better to use traditional spreadsheet software. [4] Conclusion Over the last few decades technology has changed and a various accounting software packages are developed. Despite of many advantages of using the accounting software packages in the business organisation, there are many disadvantages also. Before implementing any accounting software packages in the business enterprise, a detailed analysis should be conducted by the management for assuring whether the accounting software packages would be beneficial for the organisation overall. There are various advantages of using the accounting software packages such as speed, automatic document production, accuracy, up to date information, efficiency, cost savings, etc. Thus, all the advantages and disadvantages of accounting software packages should be studied carefully. References: Ben Scott, 2015, The Accounting Journal: Accounting Software Grows Up; Available at: https://www.myob.com/au/blog/the-accounting-journal-accounting-software-grows-up/ Quickbooks, 2015, The history of accounting software; Available at: https://www.quickbooks.co.za/product/accounting-software/history-of-accounting-software/Francis Pol C. Lim, 2013, "Impact of Information Technology on Accounting Systems; Available at: https://www.sersc.org/journals/AJMAHS/vol3_no2_2013/6.pdf Terry Cartwright, 2016, "Problems in Accounting Software"; Available at: https://www.streetdirectory.com/travel_guide/193143/accounting/_problems_in_accounting_software.html aduqne, 2013, "Problems faced by companies that are using accounting software for their businesses; Available at: https://qneaccountingsoftware.wordpress.com/2013/09/13/problems-faced-by-companies-that-are-using-accounting-software-for-their-businesses/ Mandy Mitten, 2014, Top three challenges facing accountants today; Available at: https://economia.icaew.com/opinion/october-2014/top-three-challenges-facing-accountants-today Daniel James, William Maher, 2013, 7 Accounting packages for Australian Small Businesses compared: including MYOB, QuickBooks Online, Reckon, Xero; Available at: https://www.bit.com.au/Review/344651,7-accounting-packages-for-australian-small-businesses-compared-including-myob-quickbooks-online-reckon-xero.aspx GrowthPath Pty Ltd., 2017, Review of Xero, Saasu, Quickbooks Online and MYOB; Available at: https://www.growthpath.com.au/Business-IT/review-of-myob-liveaccounts-and-xero-accounting-in-the-cloud.html ITS Education Asia, 2016, The advantages of using computerised accounting software; Available at: https://www.itseducation.asia/computerized-accounting.htmDr Venkateswarlu Pulakanam, Dr Theekshana Suraweera, 2010, Implementing Accounting Software in Small Businesses in New Zealand: An Exploratory Investigation; Available at: https://visar.csustan.edu/aaba/Pulakanam2010.pdf Eamonn Ryan, 2012, The Evolution of Accounting Software: Past, Present and Future; Available at: https://www.gaaaccounting.com/the-evolution-of-accounting-software-past-present-and-future/ Kristin, 2015, The evolution of Accounting Bookkeeping; Available at: https://www.quickbooks.co.za/product/accounting-software/history-of-accounting-software/