Well, cloud accounting is a mix of two ideas and has gained a lot of strength and interest in recent years. Many small businesses are now turning to online applications to meet their accounting needs.
The first accounting software is any computer application that will help you with any form of the accounting process. Check this site which can be as simple as a small ledger application to a complete enterprise-level accounting package.
The second concept is cloud computing. Wikipedia lists cloud computing as "Internet-based computing is Cloud computing in which software, shared resources, and information such as the power grid are available to computers and other devices when needed."
So, cloud accounting software is a way to manage your small business account completely online without the need for offline storage or applications.
So there is no separate installation on your computer and you can access your account from anywhere with an internet connection. This even means you can access your accounting data via your smartphones such as an iPhone or Blackberry.
It is always important to remember whether you are going to use an accounting software application, what the level of data security is, how easy it is to export your data to other platforms, and of course, always consider cost and ease of use as decision factors.