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Which Accounting System to Use?


24 Minute Accounting

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Unit Video

Unit Summary

The three types of accounting systems that are available to be utilized by an organization are:
  • Off the Shelf
  • Customized
  • Cloud Accounting

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Hi, in this video you will learn what Accounting systems are available and what are the benefits and downfalls of each.
A system or accounting package is required to be able to collect, store and process financial and accounting data that will be used by decision makers.
Accounting packages or systems will allow for generating accurate reports that would provide managers and other users to base their decisions on. Without a proper system, all you will have is non-informative data.
There are three (3) types of accounting systems that are available to be utilized by an organization:
  1. Off the Shelf – Off-the-shelf packages are ready made accounting systems that are ready for use, and generally provide the basics of an accounting system. The benefits are that the system would be relatively cheaper than other systems. The disadvantages of this type of system, is that if you require add-ons because your business changes, then they will probably charge you extra. Also, the “Off-the-Shelf software may require you to change your process’ to fit the software.
  1. Customized – Depending on the complexity of your organization, a customized system may be the best fit for you. The benefits are that the system would “fit your organization like a glove”. The drawback of this system can be that it can be pricey, as you would be employing the expertise of IT professionals to develop the system only for you.
  1. Cloud Accounting – This system involves using an accounting system that is based on the cloud or a pay-as-you-go model. The benefits of using this system is that you only pay small monthly subscription fees, have access to your data wherever you go, and you can save on capital expenditure (for the cost of the hardware for the software). The drawbacks of this system are that you will require a good internet connection. Also, there is a big risk that the Cloud Accounting System that you choose will not allow you to back up your data.
Making the “Good Decision” on which accounting system to use will be based on the size and complexity of the organization. Once the decision is made, then the whole department will need to be on board, in view of making the use of the system a success.

You are only as good as the system that you use. Sami Charafeddine