Factors Influencing Accounting Information Systems

This assignment delves into the crucial factors influencing the effective alignment of accounting information systems within small and medium-sized enterprises (SMEs). It examines relevant academic research, including studies on the impact of computerized accounting systems on financial reporting in developing economies. The provided list of references encompasses books, articles, patents, and case studies that shed light on various aspects of accounting software, business process integration, and the challenges of real-time reporting within SMEs.

RUNNING HEAD: Use of Accounting Software in Business
Application of Accounting Software to the
Bakery Business

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Use of Accounting Software in Business
Executive Summary
This report is about the functioning of bakery business which has considerable amount of
revenue generated in earlier years and has hired only one accountant for the organisation but
as the firm is of medium to large size it must invest in purchasing the suitable accounting
software which can assist the firm in its financial reporting requirements as well as for the
accounts handling function ( Murungi & Kayigamba, 2015). There are number of accounting
software in the market these days which provides the required and advanced features to the
business to grow and succeed. However, the firm is required to understand the system of the
business it is in and specify its core requirements to the software vendor so as to get the best
suitable solution with possible minimum investment. The firm must consider the relevant
factors before investing in the accounting software as it will help it to avoid paying for the
unnecessary features of the software.

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Use of Accounting Software in Business
Table of Contents
Executive Summary...............................................................................................................................1
Introduction...........................................................................................................................................4
Bakery Business.....................................................................................................................................5
What a baker does?...........................................................................................................................5
Business Processes Involved..............................................................................................................5
Indispensable Bakery Business Processes..............................................................................................7
Expected Outcomes from Business processes.......................................................................................8
Accounting Software & its Features....................................................................................................10
Accounting Software.......................................................................................................................10
Key Features....................................................................................................................................10
Levels of Accounting Software.............................................................................................................12
Comparison between XERO and INTACCT features.............................................................................14
Appropriate Accounting Software for Bakery Business.......................................................................15
Conclusion...........................................................................................................................................17
References...........................................................................................................................................18

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Use of Accounting Software in Business

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Use of Accounting Software in Business
Introduction
B bakery is a firm with the family owned business which is in existence for over 50 years.
The firm is involved in the business of bakery items with a workforce of on and around 70
people. B bakery has faced the ups and downs in the market for the several times however it
has managed to grow and survive since last few years through the introduction of new and
healthy bakery products. As the firm is medium to large sized it requires an implementation
of proper accounting system to record and maintain all the data in an organised form related
to the business functions so as to get effective information to run the bakery business
efficiently (Mehldahl, 2004). A proper accounting system includes various elements which is
not possible to be overlooked by a single accountant therefore the firm is required to purchase
the accounting software which can handle the major part of the accounting work without
manual intervention. Accounting software provides the business with the excellent solution
for the accounts management by performing the various accounting functions.

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Use of Accounting Software in Business
Bakery Business
What a baker does?
A Baker is the one who is engaged in the business of making bakery items such as cakes,
breads, cookies etc. The person who undertakes the bakery business must have good
knowledge and expertise in baking and preparing several items following different recipes.
Business Processes Involved
The business processes for the bakery organisation are as follows:
 Requisition Process- The process of arranging for raw materials, tools and equipment
from the suppliers i.e. the procurement of the ingredients and the moulds & machines
to make bakery items to be supplied further to the willing customers.
 Production Process– The process of producing the bakery items for selling and
distributing purpose in different market segments such as wholesale dealers,
confectionary shops, restaurants etc.
 Cost Determination: This process involves the functions of cost calculation to identify
the prices of the products manufactured by the business.
 Packaging and Labelling: This process is undertaken to provide packages and
containers to the manufactured products so as to make them available for selling and
distribution purpose. This process also includes labelling of some product related
information on the packages.
 Stores and Logistics Management – This process involves the storage of inventories
of bakery items prepared and the raw materials purchased for the production purpose
and also in determining the level of economic order quantity to be maintained so to
bear possible minimum storage cost (Christopher, 2016).
 Marketing & Promotion Process- The process of marketing is assigned to the
department which has the responsibility of promoting the baked items produced by

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Use of Accounting Software in Business
company through the use advertisements and to introduce various discount schemes
and offers in the target market.
 Selling and Distribution Process-Those who are in sales department have the core
responsibility of reach the target market to sell & distribute the finished bakery
products using adequate distribution channels.
 Accounting and Financial Management- The process involves accounts handling and
also arranging for the finance for the business and performing other related operations
(Warren, Reeve & Duchac, 2013).
 Personnel Management - The HR function involves the recruitment process of the
chefs and other staff required for the bakery organisation and overseeing the payroll
functions for the employees.
 Research and Development Process- This R&D process involves researching about
the possibilities of new items and new markets and advanced technologies to grow
and expand the bakery business
 Administrative Processes- This department undertakes the back end office functions
such as record-keeping, billing and invoicing etc.
The business processes that are above explained are assigned to several departments and each
process is linked to one another in a way that if one process goes wrong the overall
functioning of the bakery organisation gets disturbed. The growth and the survival of the
entire business of bakery depend upon the proper coordination and correlation among all the
departments (Rosemann & vom Brocke, 2015). Each process in the business has its individual
goals to achieve, which needs to be achieved in order to meet the overall objectives of
business. The baker has several responsibilities from ordering the raw materials to be used as
ingredients and the other equipment such as the moulds machines etc. Moreover, a baker has

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Use of Accounting Software in Business
to get involved in the activities of researching about new recipes and different varieties of
products that can be prepared to attract more customers for the business and to get a
competitive edge over its rivalry firms. He has to prepare various budgets and plans also to
adhere in order to achieve the best outcomes from the bakery business. A baker is also
required to go for the quality check to get the products manufactured marked as quality
products.
Indispensable Bakery Business Processes
The processes that are considered indispensable for the bakery business varies depending
upon the type and size of organisation (John Wiley & Sons, 2012). However, there are certain
processes which are necessary for any bakery business as they are merely the basic functions
without which the business will not be able to survive. They are as follows:
 Purchase management process: The procurement of raw materials as well as the
equipment used for preparing different bakery processes is the key process in the
business of bakery as ingredients are the basic things to start the baking process. The
purchase department will have to identify the dealers who are ready to supply the raw
materials to B bakery and negotiate with the final dealers.
 Production process: Once the raw material and the machines necessary for the
production process is arranged, the bakers of the firm will have to start the process of
making variety of bakery products considering the taste and preferences of the willing
buyers of the confectionary items.
 Inventory management: As the bakery business is not the seasonal business, the
demand for the products it manufactures remains on going therefore a proper stock

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Use of Accounting Software in Business
level is to be maintained by the bakery organisation in order to avoid the long lag time
and the carrying cost of inventory.
 Order management: The bakery business to survive and grow excellently must
manage the orders from the customers properly to provide effective order execution.
If proper order management is not followed by the organisation it can lose its
customer base leading to the business failure.
 Sales and distribution process: Whatever an organisation produces, is to be distributed
in various markets and places such as restaurants, confectionary shops, wholesalers or
the ultimate consumers of bakery items through the use of different distribution
channels so as to generate revenue from business.
 Accounting and finance management: Maintenance of accounts is necessary to
manage the business as it involves management of receivables & payables, cash &
bank, income & expenditure, assets & liabilities. Also, to comply with requirements
of various regulatory bodies and for preparation of financial reports to be delivered to
the investors of company.
Expected Outcomes from Business processes
Outcomes that are expected from the above business processes:
 Purchasing process: This process is expected to provide for the timely procurement of
the raw material and the identification of the potential sellers with whom the company
can enter into the deal of purchasing the required material.

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Use of Accounting Software in Business
 Production process: This process is supposed to convert the inputs into the outputs
using several operations in the most effective and efficient manner. The production
unit is expected to produce the best output with the maximum possible utilisation of
input and with minimum wastage.
 Inventory management process: The management of inventory is important to
determine the level of inventory to be maintained and proper storage of inventory. It
is expected to reduce the warehousing cost and at the same time to prevent the
problem of long lag time between the two orders.
 Order management: This process must help in the timely execution of all the orders
placed by customers in a systematic way thereby enhancing the quality of service of B
bakery which gives the best satisfaction to the customers.
 Sales & Distribution process: This process is expected to generate the revenue from
its customer for B Bakery using the suitable distribution channels so that the firm can
maximise its profits.
 Cost determination process: This process is used to determine the cost of products
manufactured by B. bakery so as to assist the management in price-fixation of bakery
items and in other decision making processes.
 Marketing process: This process is expected to promote the bakery products produced
so as to create more awareness of products in the market thereby increasing the
turnover of the firm and it will also give competitive advantage over other firms
operating in the industry.
 Accounting and finance function: The accounting function will help the firm to
manage its financial reporting system and in arranging funds for the company on
timely basis whenever it requires the funds to invest in the business (Trigo, Belfo &
Estébanez, 2014).

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Use of Accounting Software in Business
 Human resource function: This function is expected to manage the workforce of the
company through proper staffing process so that all the employees of the company
can work efficiently.
Accounting Software & its Features
Accounting Software
Any business software to be considered as a good solution must be capable of providing the
required solution to the business to operate smoothly with minimum possible investment
(Mageto, 2017). It must help the business to get a competitive edge over the rival firms
operating in the industry through innovative and advanced features that can save enough time
and efforts of the management (Salehi, Rostami & Mogada, 2010). Accounting software for B
bakery is required to provide the firm with a complete assistance for managing its finances,
fixed assets, revenues and expenditures, payables and receivables’ records adequately (Baxter
& Thibodeau, 2011). Moreover, the software must be user friendly so as to provide easy
solutions to organise the data related to accounts and finance in a systematic manner and it
must also provide the best technical support to the users (Granlund, 2011).
Key Features
Some of the key features that the accounting software for B bakery must constitute to be of
top quality are as follows:
 Account receivable and payables management: This feature will enable the proper
management of receivables and payables by calculating and maintaining the records of
amount due to be paid to the creditors and the amount due to be collected from the debtors of
the business. This function will also manage the collection and the payment process of the
company in timely manner so that the proper arrangement of funds can be done (Ramazani,
Zanjani & Vali, 2012).

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Use of Accounting Software in Business
 Billing& Invoicing: This feature will generate the invoices in predetermined format set in the
software with the required calculations for all the sales made by the B bakery. This feature
will help in avoiding the arithmetic and other logical errors in invoicing and at the same time
this feature can also perform the reminder functions for the payments (Волот & Росохач,
2016).
 Reconciliation of Bank Statements: This module of accounting software will help the
business in cross checking banking transactions recorded in the books of accounts with the
bank statements thereby finding and correcting the deviations, if any. This feature will enable
the management to identify the mistakes made in recording the bank transactions on timely
basis.
 Tax Calculator: This is the key feature every accounting software that is good enough will
provide as it involves calculations relating to various taxes and duties levied on the business
of the users. The different tax calculators can perform calculations for sales tax, VAT,
income tax, GST etc. and this feature must be fully automated to update itself for the changes
in the regulatory frameworks. If this features is enabled in the software the business
administrators would not require to possess requisite tax knowledge.
 Fixed Assets Register: The fixed asset register feature will keep the detailed records of all
the fixed assets held by company and will also calculate the depreciation thereon so that the
assets are carried at their written down values (Carpenter, Le Blanc & Robson, 2011).
 Budgeting and Forecasting: Budget preparation is something which requires requisite amount
of knowledge not necessarily possessed by every business manager so it requires a proper
accounting software to prepare those budgets and forecasts. This feature assist the
management with those budgets that are necessary for its business. The forecasting feature
will analyse the trends going on in the business, industry and from the results from past
records it will prepare the budgets according.

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Use of Accounting Software in Business
 Payroll: This feature is required to calculate the wages and the salaries to be paid to the
employees of the company on the basis of the working hours and days. This feature can also
help in determining the correct amount of bonus and incentives to be given to the deserving
personnel.
 Reporting and data analysing: The financial reporting function is the important thing
required to be performed by the accountant so as to deliver the true financial reports of the
company to the stakeholders so that they can have the knowledge of company’s financial
position in the market. As preparation of financial reports requires proper data entry and the
analytical work to organise the data in proper format which can depict the true information in
form of financial statements.
 Inventory management: As the bakery business is not the seasonal business, the demand for
the products it manufactures remains consistent, so the proper stock level is t9o be
maintained by the bakery organisation in order to avoid the long lag time between the periods
of stock out and to reduce the carrying cost of the inventory. The accounting software will
help the business in determining the economic level of quantity to be maintained by the
business.
Levels of Accounting Software
There are basically three levels of Accounting Software or accounting information
system, depending upon there the usage capacity and the functioning of the software (Belfo &
Trigo, 2013). The categories are below explained.:

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Use of Accounting Software in Business
a) Entry –level Accounting Software( Low-End)
 Suitability – Feasible for Sole Proprietor’s Business & Micro-enterprises.
 Number of users – It can take up five or fewer users to work on software
simultaneously.
 Functionality – Basic Financial Accounting & Reporting Functions such as
accounting for receivables and payables (Zhou, 2010).
 Cost – Economical than the other two categories of accounting software.
b) Small & Medium Accounting Software ( Medium-End)
 Suitability: Appropriate for Small and Middle sized firms
 Number of users: It can allow on an around 25 employees at a time to use the
software application.
 Functionality: Apart from the financial functions provide in entry level
software, it also performs functions involving other business features such as
management of stores & stock items, personnel management, purchase and
sale functions etc.

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Use of Accounting Software in Business
 Cost: Costlier than entry level software but cheaper than Enterprise level
software.
c) Enterprise Accounting Software ( High- End)
 Suitability: Mainly developed for the huge business organisations.
 Number of users: Unlimited number of users can work on this software at the
time (Schorr, et al., 2013).
 Functionality: It provides the more advanced features than the other two level
of accounting software. It can also assist the business in maintaining the
customer relationships like it keeps on monitoring the customer demands and
responding to the queries on a constant basis.
 Cost: Very expensive (Gelinas, Dull & Wheel, 2011).
As B Bakery is a family owned business organisation with approximately 70 employees and
had earned revenue of $ 13.5 million during the previous year with the given data it can be
analysed that the organisation can be categorised as medium company. Therefore it should
select the medium sized accounting software for its business. The software will assist the
company with both of its financial and non financial features. Since the number of employees
is more in the case of B bakery it can also invest in the high end accounting software but it
will involve huge cost for it has advanced and innovative features supporting business
intelligence (Gögüs & Özer, 2014).
Comparison between XERO and INTACCT features
Specifications XERO INACCT
Customer Base Xero has freelancer, small
businesses mainly the new
start ups and also the non
Small medium and large
sized firms are the intacct’s
typical customers.

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Use of Accounting Software in Business
profit organisations as its
customers
Platforms Supported Xero can be supported on
cloud, cell-phones and the
desktop.
It supports only the cloud and
the desktop.
Basic Features provided Accounts payables and
receivables, management
reporting and analysis,
invoicing and billing feature,
fixed asset records, automatic
bank transactions feeding.
It performs wide range of
functionalities:
Besides the accounting
features it also provides
Financial Management
techniques and tools such as:
Processing of credit cards,
project and its funds
accounting, reporting of
sales, management of cash
flows etc.
Competitors or Alternative
solutions
Two main alternatives of
Xero are Quickbooks and
zoho books.
Softwares named as Coda
Financials as well as
Financial Management Suite
Areas of support Financial management Areas of Core business
Appropriate Accounting Software for Bakery Business

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Use of Accounting Software in Business
For the business of bakery the most appropriate and suitable accounting software will be the
one which makes the business functions easy for the bakery organisation such as accounts
handling, order management, inventory management etc and is easy to understand and
operate by the users and also provides an excellent technical-support (Gelinas & Dull, 2008). To
select the accounting software for business it requires consideration of several factors relating
to the business of the firm as it involves investment of a good amount in implementation of
the same (Ismail and King, 2014). As there are plenty of accounting software available in the
today’s market, to select one of the most suitable option to the business is the important
decision on part of business management since a wrong selection will lead to incurring of
unnecessary costs without any relevance of the features (Magal & Word, 2011).
From the above study it is recommended for the B bakery to invest in Xero accounting
software as xero is specifically designed for the medium sized firms where the users do not
possess any accounting related knowledge (Wiegers & Beatty, 2013). Following are some
reasons to recommend xero software to the bakery business organisation:
 No training costs: The accounting software xero is developed to provide all the
accounting related assistance from data entry functions to the complex financial
accounting through its advanced features therefore it does not require the firm to
provide required training to the managers to handle accounting functions. Moreover,
it provides the best technical support to the user of programme.
 Simplification of complex transactions: The innovative features of the accounting
software help the business in simplifying the complex data. With the use of this
software the entire file can be edited in one go as this software provides the ready
format to be just filled with the important details (Geerts and McCarthy, 2011).
 Inventory tracking: This software records all the necessary data in organised form
about the quantity of stock lying in the warehouses so as to avoid the stock out

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Use of Accounting Software in Business
position of the raw materials or the produced bakery products at the time of their
demand.
 Easy invoicing: The invoicing process gets it easy for the bakery organisation to
collect the amount of sales through fast billings with accurate calculations.
 Dashboard: The dashboard feature will allow B. bakery’s performance and
functioning to be presented as a glimpse on the software’s dashboard through the use
of charts.
 Banking connect: The banking connect feature will enable the business to connect all
its bank accounts to the software so as to get automatically updated with all the
banking transactions so that the timely reconciliation of invoices and bills can be done
with the bank transaction details.
 Reporting: The financial reporting requirement of the bakery business will be
handled by this feature as it prepares necessary reports by organising the data of the
organisation.
 Payment portal: The business can get paid on an electronic basis for the bakery
products sold through online mode using the payment acceptance feature of xero
software.
 Therefore it is recommended to B. bakery to install xero software of accounting as it
is not very costly and provides the assistance in the core business processes. Xero
software also provides the adequate technical support so it is manageable for the users
to work on.
Conclusion
From the entire research it can be concluded that the implementation of a proper accounting
software can help the business to reach at the next level as it reduces the manual intervention

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Use of Accounting Software in Business
on the business processes thereby enhancing the accuracy and effectiveness of business
functions. Since purchasing the accounting software for the business involves a good amount
of funds, the decision must be taken prudently to avoid extra cost for the irrelevant software
features. Before investing the money in any accounting software the company should be clear
about its business requirements according to the size and nature of business it is engaged in.

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Use of Accounting Software in Business
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