What Are Accounting Subsystems?
In the United States, the accounting system is based on the traditional method of recording journal entries for every transaction event that occurs, then moving the journal entries to the proper accounts in the business books to balance debits and credits and keep track of all items. However, technology has transferred this process in large part to computer software. Accountants and analysts use this software to keep track of all financial activities in the business. These programs typically include subsystems that allow for greater customization.
A subsystem in accounting programs is simply a smaller system that exists within the primary structure of the program. Without these subsystems, accounting software would be difficult to navigate, and users would have a difficult time finding the specific category or activity they wanted. Subsystems divide the software program into further pieces for specific accounting necessities, such as costs and payroll.
There is no limit to how many subsystems accounting software can have. Often, complex software that includes options for inventory, production and human resource management can have many subsystems. However, several types are common, including accounts payable and receivable, which are two categories many businesses have. A billing system, project costing system and expense systems are also common options.
Business strategies can also have subsystems, and businesses often try to link their strategy categories to the subsystems of their accounting software. For example, if a business creates a new project, it may also want a new project category subsystem in its program to account for it. Likewise, if a business instituted new inventory controls for its goods, the process would be closely linked to a revamp of the inventory subsystem.
Many subsystems in accounting software are optional -- that is, they are not required for the business and are not always used. They tend to be additional tools within the program itself that companies can choose to use for further customization. For example, the process to create new subsystems in the program is often a separate subsystem itself.