Its primary purpose is to function as an accounting information system, and it may be developed in-house by the company using it, it can be purchased from another vendor, or may it be a combination of the two with local modifications.
As you can imagine, accounting software varies tremendously in complexity, capability, and cost.
While there are thousands of accounting software packages available in the marketplace today, not all of them will work properly for you.
As with any human endeavor, there is no single, "one-size-fits-all" aspect with regard to accounting software.
The software that best fits your requirements will be dependent on the size and type of company that you run.
Although the specific requirements of every business may differ, the general requirements of a company like collections, payments, classification and analysis of financial data is what constitutes the essentials of accounting.
Most accounting software packages are comprised of individual units or modules each dealing with a specific area of accounting.
The most common general core modules are:accounts receivable (company enters money received), accounts payable (where the company enters its bills and pays money it owes), general ledger (company's "books"), billing (where company produces invoices to customers), and stock/inventory (where company keeps control of its product).
Other more specific(non-core) modules are also readily available.
They include: debt collection, expenses, inquiries, payroll, reports, and time sheets.
Although different suppliers may use alternative names for these modules, the actual name used is usually fairly self-explanatory.
Before purchasing any accounting software, it is vitally important that you determine your individual needs and concerns.
For example, software for small business/personal use is simple, easy to use, and quite inexpensive.
These programs perform simple accounting tasks such as budgets quite easily.
The next category, the so called "low end" accounting software, is known for its single entry products and serves a single market quite effectively.
Mid-market accounting software covers a wide range of business software that may be capable of serving the needs of multiple national accountancy standards and actually allows accounting to be done in multiple currencies.
The most complex and expensive "high end" business accounting software is frequently part of an extensive package of software often known as Enterprise Resource Planning or ERP software.
These highly technical and costly programs handle the specific needs of enormous companies and organizations.
Once you have decided on the level of software that is right for you, the buying process starts.
You can find accounting software in a vast number of locations including large retail stores, computer supply stores and even some large book stores.
The web also provides an easy and comprehensive resource for finding that ideal piece of software for your business.
Upon comparison shopping, you will find a large fluctuation in price depending on the services the software provides.
No matter which accounting software package you purchase, the end result should be the same--it should increase the level of your professionalism, provide added convenience to your busy life, and, most importantly, it should assist you in gaining a better understanding of your financial situation.