Accounting terms

Dictionary of all accounting terms

What is Accounting Software?

Accounting software is a type of software that accounting professionals or business owners use to process accounting transactions and manage accounts. The accounting software is usually created by a third party for small and medium-sized businesses, although large businesses and corporations have their own in-house accounting software.

More and more, accounting software is on-line based, or with many on-line features. The range of accounting software is anywhere from simple and user-friendly to complex which requires training and experience.

The cost range is also wide, with SaaS (Software as a Service) subscriptions offering low-priced, limited versions of the software for cheap. Corporation versions of the software will be much more expensive.

All accounting software has different sections - modules - that deal with specific parts of the accounting process.

The core modules are:

  • accounts receivable, for all money the business receives
  • accounts payable, for all money the business owes
  • general ledger, which is the company's records ("books")
  • billing/invoicing, for all invoicing to the business' customers
  • inventory/stock, for all the company's inventory
  • purchase order, for all the inventory orders
  • sales order, for all the orders received by customers
  • bookkeeping, for the business records payments and collections

There are other modules in different accounting software that are added on as needed. They include:

  • debt collection, for tracking and collecting unpaid invoices
  • electronic payment processing
  • expense, for entering employee business-related expenses
  • payroll, for tracking employee salary and related taxes
  • reports, for printing out financial data on various parts of the business
  • purchase requisition, for purchases order requests, approvals and tracking

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