Q.Explain the different types of accounting software available to a business, along with their suitability.
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Start your 14-day free trial to unlock the full solution →Accounting software is generally classified into three broad types depending on how closely it needs to be matched to a particular business's own requirements, and each type suits a different kind of business.
The first type is ready-to-use (off-the-shelf) software — a standard package developed generally for a wide range of businesses carrying out common, fairly standard transactions, and sold without any changes for an individual buyer. It is low in cost, quick to install and start using, and relatively easy to learn since training material for a widely used standard package is easily available; it suits small and medium businesses whose accounting needs are largely straightforward. The second type is customised software — software whose base is a general package, subsequently modified to add certain specific features a particular business requires, such as a special report format or a voucher type the standard package does not offer. It costs more than a ready-to-use package (the base package cost plus the cost of customisation), takes somewhat longer to implement since the modifications must be designed and tested, and suits businesses whose needs are mostly standard but include a few special requirements. The third type is tailor-made (tailored) software — developed from the ground up specifically for one organisation, built entirely around that organisation's own accounting and reporting requirements rather than adapted from an existing general package. It is the most expensive and slowest to implement, requires dedicated ongoing training since its logic is unique to the organisation, but offers the greatest flexibility, and suits large organisations with unique, complex or hig …
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