Components of an Accounting system

General ledger, abbreviated as G/L, is at the base of every accounting system. A general ledger can be considered as the central hub of any accounting system. You can think of the general ledger as a pool with different incoming streams of water. These streams can be thought of as sub ledger components. Following modules constitute an accounting system and serve as a source of information for G/L.

• Order entry (OE)
• Inventory control (IC)
• Accounts receivable (A/R)
• Accounts payable  (A/P)
• Cost accounting (CA)
• Payroll
• Fixed assets accounting (FAA)

The above mentioned modules can themselves be considered as ledgers. These sub modules act as sub ledgers or sub modules of the main accounting G/L module. When the information is processed in these accounting sub modules, entries are made in both sub ledgers and general ledger. An essential requirement for any accounting system to be accurate is that the sum of subtotals of all the sub modules matches the grand total in the general ledger or G/L.

Let’s take the example of an accounting system where the accounts receivable sub ledger records all the received payments and credit sales. When a transaction is performed the accounting system posts two different entries in both A/C sub ledger and G/L. You can later compare both the ledgers. If the balances match, you can consider your entries to be accurate.

A computerized accounting system can be compared to a manual accounting system. Both systems work in the same way except that the manual system uses sheets of paper while the computerized systems use database records to enter the data. Most of the computerized system delay the final posting in ledgers until approval by an authorized person usually manager accounts.  Before buying an accounting system for your business, it is important that you compare their features and modules with your requirements and select the one that suits you the most.

Quote Bean can be of great assistance to you in the selection of an accounting system. Quote Bean can offer free quotes from top UK based accounting system suppliers. Just tell us about your requirements and professional accounting system developer companies will contact you with free custom quotes.