Accounting – Definition

In the previous post, I covered the concept of a double entry system and left you with a question..

The question was: “Are ERP systems based on the double entry?” – A simple answer is yes…

As the business volumes grow, accounting systems become bulkier. The simpler applications of accounting start becoming cumbersome, and with the larger number of users, extension to multiple geographies, mobile usage etc., really pose a challenge. Also, as a worldwide trend, specialization is key. Some bodies like “The Accounts Payable Network”  and other similar bodies run specialized courses for specific streams of accounting, where you do not really need to understand end to end accounting. Also, the very basic of the single entry of accounting is used in ERPs.

This helps in splitting the work in modular types with a control account being created in the background. Accounting students, have surely seen purchase registers, sales registers and cash books being maintained separately, with individual postings to vendor / customer accounts and the total being posted to the Purchases / Sales general ledger account.

This same concept is embedded into ERPs. When periodically these modules are closed, the posting happens.

I will cover more on the double entry system in the next post.

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