Question

Describe the various types of accounting software along with their advantages
and limitations.

Answer 1

Answer:

Accounting software is an integral part of the computerised accounting system. An important factor to be considered before acquiring accounting software is the accounting expertise of people responsible in organisation for accounting work.

(i) Ready to Use: Ready to use accounting software is suited to organisations running small/conventional business where the frequency or volume of accounting transactions is very low. This is because the cost of installation is generally low and number of users is limited.

Ready to use software is relatively easier to learn and people (accountant) adaptability is very high. This is also implies that level of secrecy is relatively low and the software is prone to data frauds. The training needs are simple and sometimes the vendor(supplier of software) offers the training on the software free. However, this software offers little scope of linking to other information systems.

(ii) Customised: Accounting software may be customised to meet the special requirement of the user. Standardised accounting software available in the market may not suit or fulfil the user requirements. Customised software is suited for large and medium businesses and can be linked to the other information systems. The cost of installation and maintenance is relatively high because the high cost is to be paid to the vendor for customisation.

The customisation includes modification and addition to the software contents, provision for the specified number of users and their authentication etc. Secrecy of data and software can be better maintained in customised software. Since the need to train the software users in important, the training costs are therefore high.

(iii) Tailored: The accounting software is generally tailored in large business organisations with multi users and geographically scattered locations. This software requires specialised training to the users. The tailored software is designed to meet the specific requirements of the users and form an important part of the organisational MIS. The secrecy and authenticity checks are robust in such software's and they offer high flexibility in terms of number of users.