Q.Explain the different types of accounting software available to a business.
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Start your 14-day free trial to unlock the full solution →Accounting software is generally classified into three broad types, based on how far it is adapted to a specific organisation's requirements:
1. Ready-to-use software. A standard, off-the-shelf package designed to meet the common accounting needs of a wide range of small and medium businesses, sold without any modification. It is the cheapest option and can be used immediately, but it offers the least flexibility, since a business must fit its own practices to the software rather than the reverse.
2. Customised software. This starts from a ready-to-use base and is then modified to suit a particular organisation's specific requirements — for example, adding the company's own voucher formats or special reports that the standard package does not provide. It costs more and takes longer to put in place than a plain ready-to-use package, but it fits the organisation's needs considerably better.
3. Tailor-made software. Software developed entirely from scratch, exclusively for one organisation whose requirements are so specific that no standard or customised package can meet them — for instance, software built specifically for a large bank or a manufacturing enterprise with an unusual costing structure. It is the most expensive and time-consuming to develop, but it can be built to match the organisation's own processes exactly, and it offers the highest level of confidentiality since it is used by no one else. …
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