1. Introduction
A system of accounting where data is entered into simple vouchers/forms, and the software automatically processes the accounting cycle (Journal -> Ledger -> Trial Balance -> Financial Statements).
2. Types of Accounting Software
A. Readymade Software
- Standard software available in the market (e.g., Tally).
- Pros: Low cost, easy to learn, readymade.
- Cons: Cannot be modified, limited features.
- Suitability: Small businesses.
B. Customised Software
- Standard software modified to suit specific needs.
- Pros: Meets specific requirements.
- Cons: Higher cost than readymade, training required.
- Suitability: Medium and large businesses.
C. Tailor-made Software
- Software developed from scratch for a specific organization.
- Pros: Perfect fit for business operations.
- Cons: Very high cost, long development time.
- Suitability: Large MNCs with unique processes.
3. Factors Affecting Choice of Software
Cost of installation, flexibility, training needs, hardware requirements, and data security.