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ACCT341, Chapter 15 Accounting Software


AIS Software Market. Entry-level (Entry) software is designed for smaller businesses those with revenues of less than $5 million and with up to 20 employees. – PowerPoint PPT presentation

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Title: ACCT341, Chapter 15 Accounting Software

ACCT341, Chapter 15Accounting Software
  • Accounting software
  • Early decades
  • primarily processed bookkeeping transactions
  • Today
  • it has become much more of a mgmt tool
  • customizes financial reports
  • provides sophisticated ratio analyses and
  • performs forecasting functions.
  • has evolved into a part of integrated enterprise
  • accommodates specific industry information needs

AIS Software Market
  • Entry-level (Entry) software is designed for
    smaller businessesthose with revenues of less
    than 5 million and with up to 20 employees.
    Estimated 5 million U.S. companies fitting this
  • Small to medium business (SMB) software is
    engineered for companies with sales of up to 100
    million and no more than 100 employees. About
    516,000 companies meet that description.
  • Small to medium enterprise (SME) software is
    designed for organizations with sales of up to
    500 million and as many as 500 employees. Some
    84,000 companies make up this category.
  • Enterprise resource planning (ERP) software is
    for the largest organizations with sales
    exceeding 500 million and more than 500
    employees. An estimated 17,000 companies fit that

Integrated Accounting Software Programs
  • Most companies purchase accounting and enterprise
    software rather than developing internally
  • But usually only 80 of needs can be met with
    purchased software
  • 20 of needs met
  • by supplemental software (e.g. Excel)
  • or by customizing purchased software (if vendor
    supplies source code)
  • Installation/setup of mid-to-high end software is
  • a value-added reseller (VAR) or qualified
    installer is needed.

Integrated Accounting Software
  • process all types of accounting transactions
  • include transactions affecting accounts in the
    general and special journals
  • organize transaction processing in modules and
    provide links among the modules
  • general ledger module includes the chart of
  • other modules usually include accounts
    receivable, accounts payable, inventory and
  • journal entries recorded in modules update the
    ledger module

Integrated Accounting Software Programs - Features
  • Can handle multiple companies and users
  • Has audit trails
  • Has budgeting capability
  • Provides cash-based and accrual-based accounting
  • Can print checks and invoices
  • Can customize financial reporting

Integrated Accounting Software Programs - Features
  • Has E-commerce features
  • Has tools for financial analysis
  • Can generate graphic reports
  • Can manage the inventory
  • Can handle recurring journal entries
  • Accommodates business growth
  • Can provide variance analysis.

Buying Accounting Software
  • mid-range or high-end accounting software
    packages are usually purchased from a value-added
    reseller (VAR)
  • VARs provide buyers with services such as
    installation, customization, and training (if
    they know what theyre doing ! E.g. WWU initially
    hired a bad VAR)
  • a VAR offers a broader array of services than a
    qualified installer

Small Business Accounting Software
  • Small business owners are usually concerned with
  • cash flows and
  • figuring out if they have been profitable.
  • The three top-rated small business accounting
    software include
  • QuickBooks products by Intuit
  • Sage50 (formerly PeachTree) products by Sage
  • DacEasy, Simply Accounting, etc.

Mid-Range Accounting Software
  • A mid-range software package is usefulwhen
    transaction processing needs
  • grow in volume and
  • increase in complexity.
  • Some examples of accounting softwarepackages of
    this type are
  • Microsofts Dynamics GP
  • SAP Business One
  • Sages MAS90
  • Intuits QuickBooks Enterprise Solutions

Mid-Range Accounting Software
  • These software packages offer manyfeatures. They
  • convert transactions from one currency to
  • write checks in foreign currencies
  • split commissions among multiple salespersons
  • handle more than just accounting functions
  • be deployed from an array of options including
  • desktop computers, a web browser, or a hosted
  • solution

Hosted Solutions
  • Another option is hosted solutions, also called
    cloud computing, or e-sourcing. This is
    where the software is rented and hosted online.
  • E.g. QuickBooks online
  • Advantages
  • No upgrades (always have most current version)
  • Auto backup (Computer crashes? No problem.)
  • Universal access 24/7
  • Multiple user access around the world
  • Password access of parts restricted to certain
  • Facilitates online business

Specialized AccountingInformation Systems
  • Accounting software
  • began with programs written to automate common,
    repetitive transactions
  • has become increasingly sophisticated and
    customized for specific industries
  • offer add-on modules that can process special
  • are useful to manufacturers and construction
    companies, and point-of-sale features for
  • sell source code with their programs to customize
    the software to fit specialized information needs

Enterprise-Wide Accounting Software Solutions
  • Enterprise resource planning (ERP) systems
  • are integrated programs with a central data base
  • do much more than process financial data
  • expand with the price and complexity of software
  • have the ability to interface with customers and
    suppliers(supply chain management).
  • ERP systems include
  • SAP (used by PG, Kodak, etc.)
  • Oracle / PeopleSoft (used by Wal-Mart)
  • Microsoft Dynamics GP Enterprise

ERP Historical Development
  • Enterprise System Functionality
  • ERP systems originated from manufacturing systems
  • MRP I Systems
  • Marketing sales projections,
  • Production schedules
  • MRP II Systems
  • MRP I plus forecasting
  • planning for all manufacturing resources
    including labor and overheads
  • ERP Systems combined MRP II systems with
    accounting and finance functions

Traditional ERP Functions
  • Traditional functions are concerned with
    back-office functions which primarily deal with
    internal systems, such as
  • Order processing and fulfillment
  • Manufacturing
  • Purchasing
  • Human resources

Traditional ERP
Extended ERP Functions
  • Integrated external front-office functions
  • Traditional capabilities plus
  • E-business
  • Customer management
  • Supplier management
  • Business partner management
  • Strategic business relationship management

Extended EnterpriseInformation System
The Talking Bears
The Architecture of Enterprise Systems
  • ERP Configurations
  • are client-server based
  • can typically run on many operating system
  • Centralized database
  • stores information about each dataitem just once
  • makes it immediately available toall the various

The Architecture of Enterprise Systems
  • Application interfaces
  • a best-of-breed approach (BOB)
  • extended application interfaces
  • Internet portals
  • Are gateways to other web sites
  • enhance communication andproductivity among
    employees,customers, partners, and suppliers

ERP Systems and BusinessProcess Reengineering
  • Buying an ERP system
  • is akin to a new way of doing business
  • entails reengineering an organization,
  • encourages the separate units to conform to
    standard practices

Implementing an Enterprise System
  • Implementing an ERP involves
  • systems planning,
  • forming the project team,
  • selection of the software and the consultant,
  • pre-implementation work,
  • follow-up after going live,
  • training of personnel, and
  • change in management methods, if warranted

Systems Development
Costs and Benefitsof Enterprise Systems
  • Hardware
  • Software
  • Training
  • Technical
  • Business processes
  • Data conversion
  • Interfaces and customization
  • Professional services
  • Reassigned employees
  • Software maintenance
  • Software upgrades
  • Reduction in inventory investment
  • Improvement in asset management
  • Improved decision-making
  • Resolution of data redundancyand integrity
  • Increase in flexibility and responsiveness
  • Improved customer serviceand satisfaction
  • Global and supply chain integration

Buying Accounting Software
  • --Large organizations with specialized needs
  • may require a customized AIS
  • likely to be costly, but
  • will prove to be a good choice in the long run.
  • -- may manage with a packaged software for 80 of
    their needs
  • -- Installation/setup of mid-to-high end software
    is complex
  • a value-added reseller (VAR) or qualified
    installer is often needed.