Question

does a user of accounting software require a techical background? please explain.

Answer 1

Accounting is the process of recording financial and non-financial transactions in order to present true and fair view of a business. Accounting also involves analysis of statements and communicating the same to the users of these statements.

Yes, a user of accounting software requires technical background such as the following:

1. Accounting knowledge: A user of accounting software must have accounting knowledge in order to properly record the financial and non-financial transactions. The accounting software helps in recording the transactions but the input is to be provided by the user. The process of journalizing, posting needs to be known to the user for maintaining accuracy of transactions.

2. Analytical Knowledge: An accounting software helps in preparing the financial statements such as Profit or Loss A/c, Balance Sheet or Cash Flow Statement but the analysis of these statements are the responsibility of the accountant i.e. the user of software. He needs to analyze the financial statements in order to identify the problems faced by the business and communicate the same to the management for timely decision making. A user would be able to properly analyze the financial statements only if he has prior technical knowledge.

3. Information Technology knowledge: The user of accounting software must have prior information technology knowledge in order to operate the software and other related applications (such as Microsoft Excel, Word, etc.) required to properly record, analyse and communicate the transactions. A user without having sound information technology knowledge would not be able to produce good results.

4. Communication knowledge: A user of accounting software also need to have prior communication skill. This skill is required for communicating the financial statements to the users of these statements such as Management, Investors, Bankers, etc. Proper communication is a must in financial statements as improper communication may lead to improper decision making which in turn would prove bad for the organization.

Thus, although an accounting software may prepare financial statements but proper accounting and analysis of these statements require prior technical knowledge in order to produce best results.