Types of accounting software

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Age: 2022
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Accounting software is used to collect and report information about the financial viability of a business. This software is crucial for the proper management of a business. Before choosing a software package, it is important to know the different types of accounting software and under what circumstances they should be used. The following list shows the general classifications of accounting software.


A fairly small business can use an electronic spreadsheet as its accounting software. Spreadsheet software is inexpensive and the system can be configured as desired. However, spreadsheets are prone to errors because information can be entered in the wrong place, incorrectly, or not at all, resulting in inaccurate financial statements. Therefore, spreadsheets are generally only used by companies that have a very low volume of transactions.

Commercially available software

Commercially off-the-shelf (COTS) software is the most widely used accounting software in the world. It is moderately customizable to a company's needs, contains multiple levels of error detection to prevent the entry of incorrect information, and produces standard reports that can usually be customized to the user's needs. There are COTS packages that are specifically tailored to certain industries and have additional features to meet the needs of each target market. Consultants may need to be brought in to install COTS software, and a lengthy installation process and on-site personnel may be required to maintain the software. A variation on this concept is accounting software Malaysia that is available as an online service and requires users to log on to the vendor's website to access the software. The latter concept requires paying a monthly fee per user rather than purchasing the software upfront.

Enterprise Resource Planning (ERP) Software.

ERP software integrates information from all areas of a business into a single database. This approach eliminates the problems associated with independent department-specific software that does not share information. However, it is also very expensive and can take more than a year to install. This software is usually only required by the largest and most complex companies.

Custom accounting software

This software is developed specifically for a company. This approach is usually taken only when a company's needs are so specific that they cannot be met by a COTS or ERP package. However, this approach is rarely chosen because custom software is usually error-prone and requires more maintenance than commercially available packages.

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Posted 21 Dec 2022

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