PRE-PACKAGED ACCOUNTING SOFTWARE

1. There are several prepackaged accounting software which are available in the market and are used

extensively for small and medium sized organizations.

2. These softwares are easy to use, relatively inexpensive and readily available.

3. The installation of these softwares are very simple. An installation diskette or CD is provided with the

software which can be used to install the software on a personal computer. A network version of this

software is also generally available which needs to be installed on the server and work can be

performed from the various workstations connected to the server.

4. Along with the software an user’s manual is provided which guides the user on how to use the

software.

5. After installation of the software, the user should check the version of the software to ensure that

they have been provided with the latest.

6. The vendor normally provides regular updates to take care of the changes of law as well as add

features to the existing software.

7. These softwares normally have a section which provides for the creation of a company. The name,

address, phone numbers and other details of the company like VAT registration number, PAN and TAN

numbers are feeded into the system. The accounting period has to be set by inserting the first and the

last day of the financial year. The next step in the use of this software could be the creation of accounts.

This is done by adding the accounts along with their codes into the master file files. Each account has to

be classified into whether it is an asset or liability or an income or expenditure to the system. The

opening balances are to be entered into the master file files. The company parameters need to be set at

this point of time so that the accounts which are the cash, bank, sundry debtors, sundry creditors, etc.

are known to the system. The customers’ names, addresses and other basic details are also entered in

the customer master file. Similarly, the creditors details are entered into the creditor master file files.

Product details are entered through the product master file files. Here the unit of measurement and the

opening stock quantities including the values are provided. The system of valuation of stock like the

FIFO, LIFO, Weighted average, etc. are defined in the product master file files.

ADVANTAGES OF PRE-PACKAGED ACCOUNTING SOFTWARE

1. Easy to Install - The CD containing set up file is to be inserted and run to complete the installation

according to instructions as per user’s manuals.

2. Relatively Inexpensive - These packages are available at very cheap prices.

3. Easy to Use - These packages are mostly menu driven with the help options. Further the user manual

provides most of the solutions to problems that the user may face while using the software.

4. Simple Backup Procedure - Housekeeping section provides a menu for backup. The backup can be

taken on CD or hard disk.

5. Certain Flexibility of Report Formats Provided by some of the Software’s - This allows the user to

make the invoice, challan, GRNs look the way they want.

6. Very Effective for Small and Medium size Businesses - Most of their functional areas are covered by

these standardized packages.

DISADVANTAGES OF PRE-PACKAGED ACCOUNTING SOFTWARE

1. Does not cover Peculiarities of Specific Business - A standard package may not be able to take care

of the complexities of a specific business.

2. Does not cover all Functional Areas - These packages may not cover all functional areas such as

production process.

3. Customization may not be Possible - These packages may not be customized as per needs of

customers.

4. Reports Generated - All reports required for exercising management control may not be available in a

standard package.

5. Lack of Security - Security is generally missing in a pre-packaged accounting package since any person

can view data of all companies with common access password.

6. Bugs in the software - Certain bugs may remain in the software which takes long to be rectified by

the vendor and is common in the initial years of the software.

CONSIDERATIONS FOR SELECTION OF PRE-PACKAGED ACCOUNTING SOFTWARE:- The following factors

should be considered while selecting pre-packaged accounting software:

1. Fulfillment of Business Requirements - The purchaser should ensure whether the available

software meets all the business requirements.

2. Completeness of Reports: The purchaser should ensure whether the available software can provide

all the reports required by business.

3. Ease of Use - The purchaser should ensure whether the available software is easy to operate.

4. Cost - The software should not involve very high installation and running cost.

5. Reputation of the vendor - It should be ensured whether the vendor has good reputation and good

track records or not.

6. Regular updates - It should be ensured whether the vendor is prepared to give updates.