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Accounting is thousands of years old; the earliest accounting records, which date back more than 7,000 years, were found in the Middle East.

The people of that time relied on primitive accounting methods to record the growth of crops and herds. Accounting evolved, improving over the years and advancing as business advanced.

Today bookkeeping is associated with the double entry principle, described by the Italian friar Luca Pacioli. While Friar Luca is often called the "Father of Accounting," he did not invent the system. Instead, he simply described a method used by merchants in Venice during the Italian Renaissance period. His system included most of the accounting cycle as we know it today. The quotation mentioned above refers to Friar Luca.


Today's accounting systems

Developments in computer technology and especially the introduction of the PC meant that it was possible for "ordinary people" to gain access to a definite system. That is an accounting system that does it all. From the first DOS-based accounting systems such as PcPlus to today's Internet-based accounting systems such as E-conomic using SaaS (or cloud computing) as a model for the distribution of accounting systems.


1. Reporting and analysis: Information is power in today's challenging business environment. That's why any accounting program you evaluate must have robust reporting and analysis capabilities. Besides helping users gain insight into crucial financial activities, reporting and analysis functions help companies conform to government and industry regulations. The Sarbanes-Oxley Act, Basel II Accord and other stringent regulatory guidelines are putting mounting pressure on businesses and finance managers to ensure the accuracy and timeliness of published financial information.

2. Graphics: Accounting is a numbers-focused activity. Yet graphics, in the form of charts and other illustrative formats, is a powerful tool that can be used to present trends and other concepts in a way that numbers alone can't convey.

3. Automation: For many businesses, support for simple accounting transactions and basic financial management tasks just isn't enough. Many companies require the full automation of employee expenses, payrolls and time sheets; company and departmental budgets; purchase requisitions and other complex financial activities.

4. Automatic updates: Using out-of-date accounting software is like eating food that has passed its expiration date — a risky proposition that could result in severe nausea. Tax laws, regulations and financial practices change over time, so it's vital to use software that receives fast, user-transparent, automatic updates.

5. Customization: Chances are that no accounting software will exactly match your business's needs. That's why you'll want to look for a product that allows the easy customization of statements, forms, reports, screens, help systems and other program facets.

6. Internet connectivity: With the whole world moving to the Internet, it's only logical that accounting software should follow the crowd. That's why you'll want to make sure that any accounting software you consider has the ability to send and receive digital documents and handle electronic fund transfers.

7. Interoperability: The data entered into your accounting software can be productively used by various business applications in HR, sales, shipping and other key business sectors. Conversely, you may want your accounting program to draw information in from other software products. That's why you'll want to check on an accounting program's ability to interoperate with other software before deciding on whether to purchase it.

8. Scalability: With hard work, and perhaps some luck, your business will be larger and more prosperous in the years ahead. Will your accounting software be able to keep pace? Look for a product that accommodates, or can be easily upgraded to accommodate, a progressively larger number of users and a growing amount of financial data and transactions. Ask vendors about their programs' limits in these areas.

9. Expandability: Your business may grow in scope as well as size. The accounting program vendor should either offer add-on modules that allow customers to slap extra capabilities to its product, or a migration path to a full ERP environment.

10. Security: Your business depends on its accounting software for its very existence. If data is lost or tampered with you stand to lose time, money, business secrets (such as sales or profit data) and, if the damage is severe enough, your company. Any vendor should be able to tell you about its software's built-in security features as well as how its product can mesh with your own on-site safeguards (such as anti-malware technology and network firewalls).