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How Particular Software Products Improve Accounting

By Skne-Saad Oct 23, 2014 1959 Words

How Particular Software Products Improve Accounting

The term bookkeeping is most likely to justify how accounting practice has been changing over the last few decades. However, the global information revolution has a significant impact on all fields of business such as economic, finance and marketing. Thus accounting is not isolated from technology. In order to be well equipped for work environment, accounting students are being taught more computer skills in their courses (Harris,2014). Therefore, some students specialize in accounting information system at universities. Furthermore, for accounting job seekers it can be impossible to find a job with no IT skills, thus the improvement of accounting software can be considered as the most important improvement in accounting history.The purpose of this essay is to discuss and explain how particular software products have improved accounting through the importance of spreadsheet for any accountant, then how the accounting has changed in inventory control, sales including point of sales, and finally, keeping accounting documents.

It might be impossible to find an accountant who does not use spreadsheet in every day work. Page mentioned that there was a need for a high-cost software in the pre-spreadsheet time to deal with finance data, and that is replaced now with a simple function by using spreadsheets (2014). Using a software such as spreadsheet can make the work much less effort because it can deal with complex calculations in a very short time, therefore, teaching future accounting specialists computer skills is essential to prepare them for their careers. (Marriott,1992). Thus, spreadsheet is one of the most important tools for the accountant because it is probably faster than using the calculator in some cases; also the accounting outcome can be more accurate because it avoids human error. For example, if an accountant has received a long list of expenses such as building refurbishment, it is more efficient to analyse this list by using a spreadsheet and divide the long list expenses to small lists by the type of expenses because the accounting process for each type might be different, then to process it as one journal entry with several items in debit side. It is also easy to change these lists by adding or removing some items if the chief accountant, for example, asks to change any expenses from fixed assets to general expenses. Here, not only the accountant saves time by not processing this transaction in many journal entries, they also can edit the list at any time. This list can also be used later for auditing purposes as the accountant can provide that journal entry and an auditor checks it as one file. Related to Auditing, Ragland and Ramachandran stated that KPMG (one of the Big Four auditors) reported that spreadsheets is the most important software for auditors to test and analyse accounting data (2014). More specifically, the auditor can simplify accounting data such as balance sheet to test the information such as cash flow or to analyse income statement to ensure that accounting outcomes are associated with generally accepted accounting principles. Finally, after analysing accounting outcomes, accountants and other finance specialists, can extend the reporting option by illustrating accounting outcomes in graphs and charts by using spreadsheet for the decision makers.
Inventory Control Software programmes have positive effects on financial statement. Ehrenthala, Honhonb and Woenselc discuss in their research how using Inventory Software can achieve reduction in cost by showing particular goods in particular days such as weekends or working days in supermarkets (2014). Inventory Software can help the managements to reduce the amount of stock because they know how many goods or products are in their branches. Therefore, they can distribute what their branches need depending on the day or the season. In retail market, for instance, there is no need for high value stock in branches' stockrooms; management can check the quantity of beer that any branch has on Thursdays and provide more beer to cover the customers' demands in weekends. As a result, on the finance statement the stock value for the company in general will decrease which means the costs of inventory have been reduced and that can be more noticeable when the cost of keeping inventory is high. For example, in frozen products companies where electricity bills involved more in inventory cost, if the stock levels are less, the companies in this case can pay less on electricity bills. The companies also can limit other expenses of inventory such as insurance or large stockrooms. Furthermore, the Inventory Software can help accountants in the inventory work to be accurate. Bhasker emphasized that `Bar code system are almost error free. They do not rely on accuracy of a human entering data through keyboard' (Bhasker, 2001:13). In some companies data-entry is extremely a time-consuming process, trying to do the work festally might result in error. Therefore, using bar codes can solve this problem. For example, in a jewellery factory where the cost of products is high as if the accountant do mistake, the consequences will be adverse, as a result, using bar codes is more efficient in data entry. In addition, the bar code software can be beneficial in most factories that deal with high valued stock by the end of each year or quarter when the inventory can be done in one day by one accountant. As a result, Inventory Software is significantly accurate and it reduces working time as well as decreases the number of employees necessity to control the inventory at optimum levels.

Points of Sales (POS) have redefined sales accountants. Fleenor states that in retail environment, the need has increased recently for the advanced technologies in point of sales because it provides more options in collecting and saving money, deter employees theft, tracking products, and sales reporting (2006). To be organised and to avoid bank overdraft, it might be necessary for any accountant to know the amount of money whether it is cash or in the bank that their companies have every day for the daily preparation of payments such as bills and suppliers cheques. By using Point of Sales, the cash and card sales can be known at any time by checking the sales reports. Equally important, Point of Sales Software can process other sales transaction electronically. For example, in a hyper food store it can be difficult to avoid casher errors in discounts, sales and sales returned. By using Point of Sales Software, not only human errors will be avoided, but also the amount of money that company earned from many transaction in each store can be shown. That is because sales reports can illustrate details about the cost of sales, discounts and the profit of sales in each store. Before Point of Sales software era, it could take days or even months. In addition, one of the most common problems in retail markets is employees theft. According to Fulton, in 2009 employees theft estimated by 37.8 billion Dollar in the world and this can be reduced by using Point of Sales Software (2011). Point of Sales Software beside cameras might deter employees theft because each transaction in the modern retail market probably will be processed by Point of Sales, and large number of customers will check their invoices naturally or because they might need to return some items later. In this case, companies make the customer help them to deter employees theft by using Point of Sale Software and that will reduce accounting process and internal auditing tasks in term of supervising companies' money. On the other hand, a new accounting process comes to the ground with Point of Sales Software such as loyalty points for customers. Loyalty cards in some companies allow customers to take free goods, products or discounts. Therefore, the accountant must process these transactions as sales allowances in the income statement. As has been written above, it can be said that Point of Sales Software has changed the accounting recognition for the sales accounting.

As in almost all areas of accounting, Document Management System also has changed positively. According to Covaleski, Document Management Software was invented to store and organize all kind of documents electronically such as faxes, invoices, pictures, and e-mails (1998). For the accountant, keeping accounting document is one of the most important processes in accounting cycle because it is the legal prove of accounting data. Probably in most accounting departments, after entering a journal entry, all attachments such as contracts and receipts will be scanned and stored in a computer hard drive or a remote server with the same number of original journal entries in term of easily access to the documents if there is a need, rather than physically searching through multiple files. For example, if a client complains about payments, the accountant can easily access to the accounting information by using Document Management Software and send a copy of the invoice or the receipt to the client. Using Document Management Software can be also feasible for accountant to forage through old documents especially in large companies because it might be difficult to keep accounting documents saved for many years. Moreover, Covaleski reported that before Document Management Software, paper work in the United States market can cost approximately $20 in filing per document, and $370 for searching and replacing a lost document (1998). Document Management Software can reduce the cost of accounting department in general . For instance, it is not necessary to attach some documents such as a hard copy of a contract in all journal entries. Thus, the accountant can reduce the paper cost by referring to the electronic copy of the contract in a remote server or attach a CD copy of the contract with the journal entry. In the example above, the cost will be reduced by using smaller files, as well as less number of staff will be needed to maintain the paper work, and no need for large spaces to store the accounting documents.

As has been seen, a particular accounting software can illustrate how accounting has been changing positively in the last decades due to advanced information technology. Because of these developments mentioned above, it can be said that companies reduced the costs of accounting departments such as number of employees and paper usage. In addition, using that software gives more accounting details in reporting as well as avoids human errors in accounting outcomes. Apart from smoothly accounting process by using technology, accounting software can also reduce expenses such as large stockrooms design in the future. Finally, accounting has seen major improvements during the past century and it would be striking if current accountants could see the improvements in the next century.


Bhasker, R. (2001) Bar Codes. New Delhi: Tata McGraw-Hill.

Covaleski, J. M. (1998) `Document Management Software makes headway.' Accounting Today, 12 (1) pp.22.

Ehrenthala, J. C.F., Honhonb, D. and Woenselc, V. T. (2014) `Demand seasonality in retail inventory management.' European Journal of Operational Research, 238 (2) pp. 527-539.

Fleenor, G. D. (2006) `Point of Sales Software NPN.' National Petroleum News. March. p. 38.

Fulton, J. (2011) `Fingerprint the Point of Sales.' Biometric Technology Today, 2011 (3) pp. 7-9.

Harris, T.(2014) `ICTs and the Accounting Profession in a SIDS.' Accounting and Finance Research. 3 (3) pp. 58-70.
Marriott, N. (1992) `The effectiveness of using spreadsheet to teach financial accounting.' Accounting Education, 1 (2) pp. 137-150.

Page, M. (2014). `Business models as a basis for regulation of financial reporting.' Journal of Management & Governance, 18 (3), pp. 683-695.

Ragland, L. and Ramachandran, U. (2014) `Towards an understanding of excel functional skills needed for a career in public accounting: Perceptions from public accountants and accounting students.' Journal of Accounting Education, 32 (2) pp. 113-129.

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