ACC 250 Week 1 CheckPoint Choosing Accounting Software

     The task of selecting an accounting software package which meets the needs of the company or client can be the most challenging. The product needs to fits the organization’s needs, which are based on complexity and size. Accounting software is engineered to meet the needs of the organization. There are five basic groups in which the market is divided.

     Accounting market is broken into the following groups: entry-level (Entry), small to medium business (SMB), small to medium enterprise (SME), and enterprise resource planning (ERP). Not-for-profit (NFP) makes up the final group of accounting software. Entry is designed for smaller businesses with up to 20 employees and revenues less than $5 million. Currently estimates show 5 million companies fall within this group. SMB is engineered for companies with no more than 100 employees and sales up to $100 million. SME is for larger organizations which have more than 500 employees and sales exceeding $500 million. Companies can save money by using a lower product in a lower category which will have fewer features versus higher category which has long-term costs. Software such as Simply Accounting Online, Peachtree Accounting, ePeachtree, and QuickBooks, Microsoft Money Small Business, and Oracle Small Business Suite are classified under Entry. Examples of SMB are Small Business Edition, MAS 90, QuickBooks Enterprise Solutions, BusinessVision 32, Adagio, and SouthWare Excellence Series. Middle market software is MAS 200, and AcccountMate. MAS 500, ACCPAC Pro Series, and e-Synergy are examples of SME. QuickBooks Enterprise Solutions: Nonprofit Edition is an example of NFP. ERP would be the following J.D. Edwards, Oracle Financials, and Financial Management Solutions.

Reference Page

Johnston, Randolph P. (2003). A Strategy for Finding the Right Accounting          Software. Journal of Accountancy, Retrieved from 

   http://www.journalofaccountancy.com/Issues/2003/Sep/AStrategyForFindingTheRight  AccoungtingSoftware.htm

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 ACC 250 Week 1 CheckPoint Choosing Accounting Software

ACC 250 Week 1 Assignment Accounting Software Memo 1

 ACC 250 Week 1 Assignment Accounting Software Memo 1

Memorandum

To:         
From:     

cc:         
Date:      
Re:         Accounting software

Right now the software we use is out dated. This being the case, I am referring to you the task of implementing the new accounting software for this organization.

Sometimes cash Flow statements need to be presented forcibly along with profits and loss account and balance sheet. The present system is not capable of producing these statements. The new system to be purchased needs to be able to generate these statements. If the present software is continued, it is not possible to adhere to the legal requirements.

The company might diversify their operations thus enabling us to purchase major stock of another company. The company becomes holding company and the holding company has to present the consolidated balance sheet and profit and loss account. The existing software cannot cater the new demands.
 
Our current software is old it creates issues resulting in frequent shutdown which in turn creates more work for employees, i.e. duplication of work. This consumes the valuable time of employees and the result is low productivity. Frequent troubles in the operation of existing software reduce the morale of the employees. This trouble can be solved by the installation of new software. If it is not installed, it will definitely result in low productivity, low morale of the employees, high employee turnover etc.

Issue of materials and receipt of materials in the each department are done manually by the employees and the present software does not aid to this requirement .The new accounting software will need to incorporate this feature which will help the company to decide quickly the economic order quantity etc., thereby reducing the number of hours of work and as a bonus will reduce the cost of employing staff.

Analytical statements like, ratio analysis are not built in to the the existing accounting software. New accounting software will have this ability and thereby enable the Company to evaluate the real financial strengths and weaknesses of the Company.

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What is the capital market? How is the primary market different from the secondary market? In your opinion, are these markets efficient? Why or why not?

·         What is the capital market? How is the primary market different from the secondary market? In your opinion, are these markets efficient? Why or why not?

A capital market is a market for securities where organizations can raise long-term funds. It includes the stock market and the bond market. Capital markets can be classified as primary or secondary. The primary market is the part of the capital markets that deals with the sales of new stock and bond issues. Investors are able to purchase the new securities directly from the company in initial public offerings, rights issues, or preferential issues. The secondary market is where previously issued securities and financial instruments are bought and sold from one investor to another. These markets are as efficient as currently capable with the technology that exists today. In the secondary market, investors are constantly appraising the values of companies by buying and selling shares previously issued by these companies. Current prices reflect all historical data and publicly available information. Prices quickly adjust to reflect the new information released. Primary markets' prices are somewhat efficient because the secondary market is a source of pricing information for it.

Which ratios measure a corporation’s liquidity? What are some of the problems associated with using financial ratios? How would the Dupont analysis overcome some of these problems?

·         Which ratios measure a corporation’s liquidity? What are some of the problems associated with using financial ratios? How would the Dupont analysis overcome some of these problems?

Commonly used ratios that measure a firm's liquidity include the current ratio and quick ratio. There are several problems when using these ratios. First, the ratios cannot be analyzed in isolation. For example, the common rule of thumb for the current ratio is that it should be close to two to be considered healthy. However, that is not always the case. Different industries have different standards, and the ratio should be compared to the sector average instead of two. Another problem with these ratios is that their values can be made to appear better by end-of-year transactions. For example, a firm can bolster its liquidity ratio by using cash to pay off short-term liabilities. Ratios can be difficult to compare because of firms' use of different accounting practices. For example, during an inflationary period, a firm using LIFO inventory management can have an understated liquidity ratio since the value of inventory is also understated. Decomposing return on equity into various factors is called DuPont analysis. Use of the DuPont analysis gives a better understanding of the firm's strengths and weaknesses. The various components' relationship to ROE can help pinpoint the causes of a firm's weaknesses while simple ratios cannot.

Define the difference between forecasting and budgeting. What is the difference between an operating budget and a cash budget?

• Define the difference between forecasting and budgeting.  What is the difference between an operating budget and a cash budget?

Both forecasting and budgeting are estimates for future.  Estimates that are not necessarily achievable are called forecasting but achievable estimates are called budgeting.  Budgeting may be defined as planning for forthcoming period activity in quantitative and financial terms.  For example, if you want to make sales budget then it is important to know that what quantity to be sold at what price.  Suppose you have to sell 50,000 units of product A @ $10 each, it means that in quantitative terms it is 50,000 units and financial terms it is $500,000.

Forecasting is the first step which helps in making budget, if estimates have been forecasted are achievable then it is converted into budget.  For example, if marketing department forecasts that it can sell 50,000 units and company believes that all resources are available to meet the target then the budget will be made for 50,000 units.  But it some of the resources are in scarcity, say production capacity is limited to 40,000 units then company has to make budget for the achievable target.

It is important to keep in mind the difference between forecasting and budgeting.  If the difference is not kept in mind then efforts to use budget as planning tool may be in vain and there are chances of conflict between two departments.  As in our example the marketing department would be planning for 50.000 units and production department would be planning for 40,000 units.  Therefore it is necessary to make sure what is achievable to bring synchronization among all departments of the organization.