The primary purpose of accounting is to provide the information needed for sound economic decision making and conducting accounting related activities such as payroll management, inventory management, and financial forecasting.
Other purposes include providing financial information to external parties such as investors, creditors, and government taxing authorities. Managerial accounting contrasts with financial accounting in that it is for internal decision making while financial accounting should comply with Generally Accepted Accounting Principles (GAAP).
There are a wide variety of tools and software available to accomplish exactly that. However, selecting and configuring the right ones for your business or organization requires careful consideration.
Consider the following:
Managerial accounting provides managers with financial information about their organization to help them make decisions and maintain effective control over corporate resources.
It identifies, measures, analyzes, interprets, and communicates financial information in support of the management process aiding strategic decision making, planning, operational activities, and control.
Cost accounting is used to establish the budget. It reveals the actual cost of operations, processes, departments, products, variances, profitability, and use of funds. Managers use cost accounting to support decision-making to cut a company's costs and improve profitability.
However, cost accounting information is used by decision makers both inside and outside an organization. Cost and managerial accounting differ in that the latter goes beyond the role of cost accounting by combining multiple management disciplines with financial information to facilitate internal decision making. Thus, cost accounting may be seen as a necessary component of managerial accounting, but its focus is much narrower.
Financial accounting measures an organization's financial position and economic performance reporting that through financial statements issued periodically which conform to Generally Acceptable Accounting Principles (GAAP) which include a balance sheet and income statement for the firm's management, investors, lenders, suppliers, tax authorities, and other stakeholders.
Accounting software is application software that records and processes accounting transactions within functional modules while acting as an accounting information system. Accounting software varies greatly in complexity and cost.
It may be off-the-shelf such as Intuit or Peachtree accounting software applications or much more complicated like a custom written AS400/System i based solution or a proprietary written UNIX based accounting application.
A good all-in-one accounting system should have the capability to effectively enable you to manage accounts receivable, accounts payable, payroll, inventory, banking, billing, job costing, general ledger, fixed assets, and reporting.