Different types of Accounting Software PDF

Running Head: Different types of Accounting Software
ACCOUNTING SOFTWARE

Different types of Accounting Software 1
Executive Summary
This paper covers the study of possible and essential business processes for any bakery
organisation. Some of the processes that may be commonly found in every bakery business
includes purchases, production, sales, marketing, accounts & finance, human resource
management etc. These functions directly or indirectly contributes to the business’s success
and hence needed to be managed by the competent personnel. Bakery business has the main
business of manufacturing the bakery items and distributing them for the sales purpose in the
target market, it is not possible for the business to focus on all the functions with due care and
diligence and requires trained and skilled workforce for the effective functioning. However,
there involves higher chances of errors while working with the manual systems which may
lead a business towards losses. Thus the managers of bakery organisation are recommended
to implement software like enterprise resource planning or the accounting information
systems for the smooth business functioning. These software provides the business with
appropriate business solutions with one time investment in their implementation. The basic
features an accounting software performs functions like invoicing, inventory management,
account receivables and payables management, bank reconciliation etc. There are various
accounting software available in the market and B Bakery being a firm which is neither so
small in size nor too large, hence it is required to select the accounting software according to
its needs and budgets.

Different types of Accounting Software 2
Table of Contents
Executive Summary...............................................................................................................................1
Introduction...........................................................................................................................................3
All about baker and bakery business processes....................................................................................3
Accounting Software Features...............................................................................................................8
Comparison Table of XERO & MYOB....................................................................................................11
Selection of suitable accounting software...........................................................................................14
Conclusion...........................................................................................................................................15
References...........................................................................................................................................17

Different types of Accounting Software 3
Introduction
B bakery is the family owned business organisation that is indulged in producing the bakery
items such as cakes, pastries, breads and other items of similar nature. The business is in
existence for more than 50 years and has a workforce of around 70 people. It also has a
drastic growth in sales due to increased demand of its products in the market. The firm has
only one accountant to handle all its accounting related operations. Therefore, it is looking
forward to the implementation of accounting information system in the business. AIS is the
software program used in managing the accounting and other related functions of the
business without any manual intervention. These systems assists the business with its
accuracy and efficiency of operations. There are number of accounting software available in
the market these days but the bakery organisation has to select an appropriate program for its
business on the basis of its needs and size of business.
All about baker and bakery business processes
A baker is a person who is involved in the business of preparation of bakery items such as
cakes, bread, pastries, cookies etc. These items are then sold and distributed in the potential
markets such as departmental stores, confectionary shops, restaurants for their ultimate
consumption. A baker can also sell his bakery products directly to the ultimate consumers in
the case when he is carrying on the business on retail basis. There are a number of activities
involved in the bakery business such as requisition of raw material and the other necessary
items, production process, selling and distribution activities etc. However, there is no specific
set of activities that are undertaken in the bakery business. The activities and processes that
forms part of bakery business varies depending upon the size and nature of business. Few
processes that could commonly be recognised in every bakery business whether it is
conducted on small medium or large scale are explained below:

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 Supply Chain Management:
It involves purchasing and storing the raw materials that are necessary to prepare cake
and other bakery items. Along with raw material a bakers also requires machines
moulds and other types of equipment to run their business.
 Production Activities:
It involves conversion of raw materials i.e. the ingredients into final products such as
cookies, cakes etc. using different recipes and techniques of production.
 Packaging Process:
Once the production process is completed the produced goods are required to be
packed in the suitable containers and boxes so that proper distribution of bakery items
could be made.
 Branding and labelling:
Brand helps the business in providing it the unique identification in the market. The
bakery items produced by any bakery organisation needs to be stamped by its own
brand in order to be recognised differently from its competitors. Labelling includes
putting up necessary information about the products on the packages such as the
description of its ingredients, the quality mark, the price of the items, manufacturing
and expiry date etc.
 Logistic management process:
It is the process which includes the storage and warehousing of produced bakery
items and also includes practices to support order management.
 Selling and distribution process:
To sell whatever manufactured and produced is the ultimate motive of bakery
business. Hence, it sells out the produced bakery items in various target markets using
different channels of distribution.

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 Marketing activities:
Marketing is undertaken to create awareness among the potential customers about the
new bakery products that the company produces. It is sometimes done with the motive
of promoting the existing product in the market so as to gain a competitive edge over
competitors.
 Human resource management process:
The human resource management process is undertaken with the objective of
recruiting and training the employees for the company and managing their payroll
functions.
 Accounts and finance:
Accounting process includes recording of all the significant accounting related data in
an organised form to be represented as relevant information. It also includes
arrangement and deployment of the funds to run the basic operations of bakery
business. Accounting operations include management of accounts payables and
receivables, maintaining the fixed assets and calculation of depreciation there upon
etc., payment of various expenses such as utility bills and rents bank interests.
 Research and development:
This process is undertaken with the aim of exploring the possibilities of business
expansion with new bakery products and the new markets. It also covers defining new
product recipes and techniques to prepare bakery products.
 Administrative process:
It includes all the back office functioning which are miscellaneous in nature. Like
maintaining the petty cash, conducting meetings etc.

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The processes that are indispensable to be performed in the bakery business are as
followed:
 Purchase of raw materials and machines:
Without ingredients a bakery business cannot start its basic functioning of producing
different bakery items. Hence, this process is indispensable for every bakery business.
 Production of bakery items:
Producing the required bakery items is necessary as without producing them the
business would not have anything to sell and distribute.
 Packaging of bakery items:
As the produced items are edible in nature, they require proper packaging so as to
preserve and protect them and for the effective transportation thereof.
 Branding and labelling
This process enables the business in delivering the appropriate information to its
potential customers it is necessary to be performed.
 Selling and distribution:
This is the important process as it involves the sales function for all the output
produced by the bakery organisation. The distribution is carried out through various
mediums depending upon the suitability of business.
 Logistic management:
When the business produces certain range of outputs there arises a requirement for
their storage so as to keep them readily available anytime when demand arises. The
manufactured goods are thus stored in the company’s warehouses where they are kept
safely. This process also helps business in determination of appropriate level of
inventory to be maintained by the bakery organisation in order to avoid excessive
warehousing and other costs of carrying inventories.
 Human resource management

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As bakery organisation may involves few or more workforce to handle the bakery
operations such as the chefs, deliveryman and the other necessary personnel. This
process is important for their recruitment and trainings and to manage their payroll
functions (Rosemann & Brocke, 2015).
All the above mentioned processes are interdependent to each other and hence requires to be
operated in harmony (Jeston & Nelis, 2014). If failure occurs in the functioning of a single
process, the overall performance of the organisation will be hindered. Hence, the business
manager must strive to promote coordination among all the key processes of the organisation
in order to take the business to the next level of growth and success (Jeong et al., 2013).
Outcome required from the above explained processes
 Outcomes are the ultimate results delivered by the business processes. Every process
in the business is carried out for some goals and targets. Following are the desired
expected outcomes from the processes of the business:
 The purchase function is aimed at obtaining the top quality raw materials and other
items necessary for the bakery business on time so as to initiate the production
process on time. Moreover the purchases must be made in the cost effective manner
without excessive deployment of funds of company. Purchase function must enable
the business in anticipating the product demand before ordering the raw materials
from the suppliers. It will also identify the potential suppliers of ingredients required
by the organisation.
 Production process must be able to produce the required items on the timely basis
with the minimum possible cost. The process of production must be undertaken in
such way that it avoids the excessive wastage of necessary resources of business. It
has a goal of effective and efficient utilisation of company’s resources while
converting inputs into outputs.

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 The logistic management process must enable the business to determine the correct
and economic level of inventories to be maintained by the bakery organisation so as to
avoid unnecessary carrying cost of the bakery items and the stock-out positions.
 Marketing and promotion process must help the business in identifying the target
market and to make the business able to reach the potential customers of bakery
products.
 Selling and distribution must bring in the maximum revenue for the bakery business
by selling the produced items in the most profitable manner.
 Accounts handling process must be provide the business with the necessary record
maintenance with accuracy so as to fulfil its financial reporting requirements. The
finance process must make the deployment of right amount of funds in the right place
at the right time so that with the least cost of finance highest returns can be earned
(Toth, 2012).
 Human resource function should bring the competent and skilled personnel to the
business so that their efforts can contribute the organisation’s success.
Accounting Software Features
Possible features an accounting software must possess to achieve the enterprise’s I.T.
investment:
The accounting software must provide the accuracy in whatever functionality it performs. As
it processes the accounting data which may be sensitive to the organisation, it must provide
the secured enough to carry the information that is critical to organisation’s success.
Moreover, the accounting software must be sufficiently compatible for the devices of the
company so that the functions performed by it would not get hampered by the company’s use
of different devices (Dimitriu & Matei, 2014). These software program must be easy to
implement, use and maintain for the user so that they do not have to invest so much of time

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and efforts for to understand and work on these programs. Furthermore, the functions
provided by the accounting software must be performed on time by speedier transaction
processing in real time so that the relevant and significant actions and decisions could be
taken on time (Ghasemi, et al., 2011).
 Automated invoicing: This feature enables the business with automatic invoice
issuance to the customers whenever the payment is due from them. This feature will
help in avoiding delayed collection of receivables from the debtors of the company.
 Payment reminders: This feature works as an alarm by reminding the business
managers on regular basis for all the payments due on them either via e-mails or
messages so that timely payments could be made without any penalties and interests.
 Bank reconciliation: This function plays an important role as it enables the business
managers to tally the account balances which involved banking transactions with the
bank statements on a regular basis.
 Payroll functions: It is used to calculate the basic wages and salaries to be paid to the
employees of the company. It also maintains the records of attendance as well as
leaves taken by the employees of the company.
 Reporting and analysis: This feature helps the businesses in adhering to the financial
reporting requirements as prescribed by various regulatory bodies. The accounting
software follows the basic rules of accounting while processing the accounting data.
This feature also enables the business in making the analysis of all the relevant data so
that proper comparison of company’s financial results can be made.
 Tax calculators: It is used to report to various fiscal bodies like income tax
department, service tax department etc. about the tax obligations of the firm. With the
help of this feature a business manager can comply with all the statutory requirements

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with accuracy. This features calculates the tax amounts under various statutes in
accordance with the amended tax structures.
 Budgeting and projections: This function is used to make projections about the
subsequent periods for the business in order to comply with the terms and conditions
of providers of finance. Budget functionality helps to provide the business managers
an estimation of cash outflows and inflows a business would make based on the
previous trends followed by the business.
 Depreciation calculator: This feature will assist the business managers in determining
the correct amount of depreciation required to be charged to entity’s fixed assets to
provide for the obsolesce and wearing out of various machines and equipment.
Accounting software calculates the depreciation in accordance with the recent most
reforms in this context.
 Payment processing: This feature automatically updates the account balances when
the amounts are directly paid or received in the bank accounts by keeping track of all
the banking transactions thereby avoiding the risk of misstated account balances.
However, there is no inclusive list of accounting features that a software must provide in
order to be called as appropriate one. The business managers must analyse its own
requirements bearing in mind the business it is dealing in and in accordance with the
demands and requirements of the business they must select a suitable accounting software for
their business.
Category of accounting software that is suitable to the business of B Bakery:
Accounting software are the computer programs that aids the business in handling its
accounting operations by the innovative and robust features that works on automated basis. In
general, there exists three categories of accounting information software (Baxter &

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Thibodeau, 2011). First one is the entry level software which is suitable for low level
enterprises, second is small to medium sized software which is suitable for middle sized firms
and the third is enterprise accounting software which is suitable for large sized firms
(Romney & Steinbart, 2012).There are various factors on the basis of which the accounting
software are so bifurcated in the three categories (Al-Hiyari, Mashre & Mat, 2013). Few of
them are: the size of the firm, the number of users, preferred functionalities, and the cost of
the software (Ismail & King, 2014). As given in the case, business of B Bakery involves
around 70 employees and generating a revenue of more than $13.5 million per year hence it
can be said that its business is small to medium sized and therefore medium level of software
will be appropriate selection for B Bakery. Small to Medium level accounting software
allows up to 25 users to work on the software system simultaneously. It performs the
financial functions as provided by the entry level software and along with that it additionally
performs non-financial functionalities such as inventory management, management of
purchase and sales functions, human resource management etc. The medium level software
are more costly than the low level accounting software but much cheaper than high end
Accounting information system (Gelinas, Dull &Wheeler, 2011). As the business of B
Bakery does not only require financial functions relating to revenue generation, to be
performed but also requires other functions like management of payroll, inventory, accounts
payables and receivables together with the sales and purchase functions. However, since the
size of the firm is not too large it must not invest its funds in paying for the unnecessary
features as provided by high end accounting software (Salehi, Rostami & Mogadam, 2010).
Comparison Table of XERO & MYOB
Comparison of XERO and MYOB accounting software for small to middle sized firm:
Features XERO MYOB Better option

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Invoicing Invoice is sent
directly to the
customers and
provides the features
of customisation to
the invoice formats.
Invoice is sent
directly to the
customers and
provides the features
of customisation to
the invoice formats.
Both performs
almost similar
functions However,
invoice
customisation is
more flexible in
XERO.
Reporting It can run multiple
reports at a time.
Only one report can
be processed in one
go.
Therefore, XERO is
better than MYOB.
Inventory
management
It includes functions
like basic tracking of
inventory and its
management
thereupon.
It only provides
basic inventory
tracking features.
Management of
inventory is
provided merely in
the case of Account
Right MYOB.
XERO is better as it
offers integration
with the third parties
which makes it more
flexible than MYOB
and also it is user
specific in terms of
needs.
Foreign currency Multicurrency is
supported by XERO
on the basis of
premium
subscription.
MYOB does not
support
multicurrency
transactions.
XERO is preferable.
Technical online It provides online It also provides the XERO is preferable

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support documentation, user
training videos and
online community to
resolve the queries.
online training
videos, user manual
documentation and
online community.
than MYOB as
XERO has
simplified tier
structure which
makes support more
helping and
understanding.
End of financial year
Data Rollover
For XERO data is
perpetual and hence
need not to be closed
for every financial
year.
For MYOB Account
Right data requires
two separate roll
over functions at the
end of every
financial year. One
for accounting and
other for payroll
(Păcurari & Nechita,
2013).
XERO is preferable
as the rollover
requirement of
Account Right
MYOB is quite
cumbersome.
Employee login It includes a feature
called ‘my payroll’
which allows
employees to enter
their timesheets,
request for leave
sanction, view their
own play-slips
MYOB provides a
featured called ‘your
pay’ which also
allows them to enter
timesheets, can
request for the
leaves and also can
view the pay-slips.
XERO is better.

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(Walther, 2013). But MYOB Account
Right provides no
employees login.
Selection of suitable accounting software:
On the basis of above comparison XERO can be selected:
As accounting operations does not form part of revenue generating activities of business,
these functions can be handed over to such software since they provide the best business
solutions with the help of artificial intelligence (Darvasi et al., 2011). The accounting
information software requires investment of considerable amount for one time so as to
receive its benefits for the long term. Therefore, the business managers must make a detailed
study of all the possible software before selecting one (Ivancevich, Ivancevich & Elikai,
2010). Accounting software for small to medium sized firms must be able to perform
functions relating to the financial transactions such as general ledger functions, management
of accounts payables and receivables, payroll functions, maintenance of adequate level of
inventory etc. (Christauskas & Miseviciene, 2012) (Warren, Reeve & Duchac, 2013). B
Bakery can consider investment in XERO software as it is suitable for its key business
functions. Following are some prime reasons to select XERO:
 XERO is developed and designed in such a way that the new users would not find it
difficult to work on this software. It also provides the best technical supports also to
answer the queries of the users of the software (Pulakanam & Suraweera, 2010).
Hence, the employees of the company does not require heavy trainings before starting
to use such software. Thus XERO helps in avoiding the huge training costs for the
novices.

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 XERO helps in simplifying the complex information by interpreting it easily.
Complex data is difficult to be understood by the users of financial information thus
the accounting software removes the complexities of data by processing it
appropriately (Soudani, 2012)
 Inventory of the business could also be managed adequately by using the XERO
accounting software. It assists the business in tracking the inventory that is kept in
various warehouses of the company (Lim, 2013). So that the business may account for
the total stock that is lying in its stores. This function enables the business manager to
avoid the overlapping cost of inventory maintenance by controlling the multiple
stocking of the inventories.
 The invoicing process of XERO software is also easy as it provides the facility of
invoice layout customisation as per the needs of the business (Seethamraju, 2012).
 Financial reporting and other business reports can be drawn with an ease as XERO
prepares easily understandable reports. The reports are prepared using the raw data
provided by the entity (Grabski, Leech & Schmidt, 2011).
 Bank reconciliation feature provided by the XERO accounting software will enable
the business managers to match the account balances with the bank statements by
identifying the reasons of deviations and making corrections thereon.
Conclusion
From the above research about the business of B Bakery it can be well concluded that the
business is small to medium sized keeping in mind the level of revenue and the number of
employees it has hired. Hence, it is difficult for the firm to continue with the manual system
of accounting using the services of a single accountant. The firm therefore requires an

Different types of Accounting Software 16
appropriate accounting information system for its business. However, implementation of such
software program involves due consideration of several factors as it is a one-time investment
which entails long term benefits. B Bakery must make a detailed study of suitable software
available in the market and select the one which is best suited to the business of bakery.

Different types of Accounting Software 17
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