Accounting software describes a type of application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll and trial balance. It functions as an accounting information system.

Types of Accounting Software : Following are the categorise of Accounting Software :

1. Ready-made Software : Ready-made softwares are the softwares that are developed not for any specific user but for the users in general. Since, the ready-made softwares are for general user, it is not necessary that all the modules of such softwares are of use for every user. These types of softwares are economical. Some of the ready-made softwares are Tally, Tally Ex, Busy, Profit and Professional Accountant. Out of all these ready-made softwares available in market. Tally appears to be most popular and widely used accounting software. As such software is used by so many people it is easy to get persons for operating the same.

2. Customised Software : When ready-made software is modified according to the need of the customer or user, it is called customised software. When ready-made software is modified according the need of customer, it provides ease to customer. But they are not economical, customer has to pay for additional charges for modification of ready¬made software. Advantages and disadvantages of this type of software are same as that of readymade software. For example, design of invoice is modified according to the need of customer.

3. Tailor-made Software : Tailor-made software is software that is made to the specifications of a client. Some customers get accounting software developed completely as per their need. As such software are designed and developed according to need of a customer, they are not readily available in the market. As such software is designed keeping in mind the requirements of the customer, customer gets all information, facilities and statements as required using such software. However, it can be more expensive than the ready-made one.

While sourcing the accounting software, its cost, need of the organisation, flexibility, facility of data exchange or transfer, need for training, cost of maintenance, etc. should be kept in mind.