Meaning and Definition of Computer

According to Webster's Dictionary, a Computer is *an aulomatic electronic

machine for performing caleulations". Bul it cannot be delincd merely a caleutating
machine because it is capable of answering the yuestions based on the data stored
inside it.
According to International Standard Organisation or 1.S.O. : *"A Computer is a
data processor that can perform substantial computations, including nunerousarith
metic and logic operations, without intervention by
A
a human operatorduringthe run."
 Capabilities or Features or Characteristics of a Computer System
The following are the main Characteristics of Computers
(DA Computer is an automatic machine: Once the data andinstructions are fed
into a computer, it executes them one by one without human intervention.
(2) Memory or Storage : The memory of a Computer is so large that it can stor
any volume of information or data for being processed. Such informations can be

stored in it on a permanent basis on magnetic discs, floppy discs. punched cardsor

microfilms etc. The information stored in it can also be recaliled at any time wnen
required
(3) High Speed Computers are known for their lightning speed of operativns
The speed is so high that it is ordinarily expressed in microseconds (1 miero second
1/10.00.000 of one second). In otherwords, they can perform millions of operatbons in
one second. Moreover. the calculations will be error-free and the speed is raprd
increasing day-by-day.
 (4) Accuracy : Computers are extremely accurate. Their operations are error-free
and as such the information obtained from it is highly reliable. Of course, sometimes
we hear funny stories about the mistakes committed by the Computers. But the real
culprit is not the computer but the operator who feeds inaccurate data into it. As such,
in computer terminology, there is a word GIGO (Garbage in, garbage out).
(5) Diligence: A may feel mental and physical fatigue after
man
long working
hours but a computer never gets tired like a human being. It can work continuously for
many days at a time and never says, "I am too tired to do any more work". Moreover,
it does not suffer from lack of concentration and can perform the jobs of repetitive
nature any number of times, in exactly the same way.
(6) Scientific Approach A Computer operates scientifically and never gets
:
emotional while solving the problems. It always acts in a neutral manner and is never
affected by the feelings and opinions of someone.
(7) Versatile Machine : A Computer is capable of performing a wide variety of
jobs. It can switch over from one programme to another according to the instructions
fed into it. The same computer be used for
can accounting work, invoicing, stock
control, sales analysis and even for playing Chess.
(8) Usage of Special Language : A Computer does not understand the ordinary
language. A number of special languages have been developed in order to feed the
informations and data into a Computer. The names of some of the special languages
are BASIC, COBOL, PASCAL, FORTRAN.
Each of the above languages is used for processing a specific type of data. Such
as

(I) COBOL is a language used for processing the business informations.

(II) FORTRAN is a language most suited for processing the mathematical and
statistical informations.
(III) BASIC is used by the persons who have just started to learn the programming.
(0) Daiailhd u
 (10) Use of Binary System:-Computers do not use the decimal
system but use
atwO-way system known as Binary System. Under this system the informations stored
inthe Computer are in two Digits only. These two digits are 0 and 1.
For example, if we want to convert the decimal number 43 into binary
digits, the
procedure for conversion will be as follows
Operation Quotient Remainders
432 21 With a remainder
212 = 10 With a remainder 1
10 2 5 With a remainder 0
52 2 With a remainder 1
2 2 =F 1 With a remainder 0
 11. AComputer is different from a Calculator:A Computer contains much
more than a Calculator. A Calculator can work only with numbers whereas a Computer
can work with both numbers and words. Another difference is that a Calculator is not
capable of storing the data, whereas a Computer can store large volume of data in its
memory and reproduce any part of it, as and when needed.

Limitations of a Computer System

A computer system renders various useful services to its uses. It also suffers from
the following limitations
(i) Lack of Decision-making: Computers are only helpful in taking the decision
while they cannot take decisions on their own. Decision-making is a complex process
which requires a lot of understanding, information, intelligence and ability to decide.
Computers need to be programmed beforehand in order to become able to take
decisions.
(ii) Lack of Intelligence Quotient : Computers are mere machines with Zero 1Q
(Intelligence Quotient). Computers need to be programmed before hand in order to
become able to handle the situation. They cannot think themselves and need to be
directed each and every step. They are only as good as man makes and uses them.
(ii) Lack of Common-Sense : A computer system lacks in common-sense. A
computer will keep on working as per its programming and fails to analyse the logical
or illogical aspect of it.
(iv) Lack of Feelings : Computers are devoid of emotions. They have no feelings
and no instincts because they are a machine. Although men have succeeded in building
a memory for the computer, but no computer possesses the equivalent of a human heart
and soul.
 ELEMENTSOF A cOMPUTER SYSTEM
Cmputer system ideally consists of following three major elements:
Hardware 2. Software 3. Humanware
1. Hardware
omputer Hardwares are the components of computer that have physical existence
h as keyboard, CPU, monitor, mouse, etc.
 22.2 Double Entry Book
Keeping-CBSE XI
Basic Components of the Computer Hardware
lectively
Followings are the basic components of a computer that collectively form
form
These parts are necessary for a computer to perform the basic functions.
a
system,
1. Motherboard
The motherboard is the main circuit board of your computer and is also known a.
mainboard or logic board. It is a printed circuit board and is responsible for ho
ble for the
housing
all the important components of your computer system. The motherboard getsite
from the fact that it is a printed circuit board and 1s able to have many other devi
added to it. These added devices are CPU, ROM, memory, RAM expansion slots Dees
PCI
slots, and USB ports. It also includes controllers for devices like the hard drive. n r
drive, keyboard, and mouse. Basically, the motherboard is what makes everythinoi
VD
g in
your computer work together.
2. Processor
A Processor, or Microprocessor' or 'Central Processirng Unit' (CPU) is a small chip that
generally resides in motherboard. CPU is the brain of the computer and provides ability
to computer for executing any given instruction and also tells the computer how to
control
the flow of instructions. In computer system all the major calculations and
comparisons
are made inside the CPU and the CPU is also
responsible for activating and
controlling
the operations of other units of a computer system. It handles all the basic system
instructions, such as processing mouse and keyboard input and running applications.
Basic parts of a processor: A CPU has the
following main parts:
() ALU (Arithmetic and Logical Unit)
This unit of the CPU is capable of performing arithmetic and logical operations like
addition, multiplication, subtraction, division, comparison of two
numbers, etc.
(ii) Memory Unit
A processor has its own memory inside it in the
shape of small cells. Each memoy
cell is called a
"Register". ALU gets data from registers and stores it in registers
to perform arithmetic and
logical operations. Data comes in registers from
memory (RAM) of the computer. primary
(ii) Control Unit
This unit of the processor controls all
the activities of the ls
the input and output devices of the processor and also conud
computer like mouse, keyboard, VDU,
printer, c
t.
3. Primary Storage Memory
Primary memory 1s also known as volatile
When a data 18 processed, a copy of that memory RAM (Random Access Mem
or
data is opened in RAM of the compute
for

hanges orcalculation to be carried out

and thereafter save the
unsave The main teature of RAM
is a changes or maytl
only for the time when temporary
the power is
or volatile memory in wn
da
ver is
switched on and is lost once the
p
1 p u i e r 3 J
witched.
permanently
off. Another form of memory is ROM (Read-only Memory) which holds the
oermanentiy that cannot be changed. It is permanently non-volatile, means it
lata
ds its memory even when power is removed. ROM contains the programme that
sired when computer is turned on. It starts the process of boot up' and transfer
cont CPU and
ntrol to the is in it.
thus, Operating System installed
econdary Storage Devices
aondary Sto
ndary Storage Devices or external
directly memory differs from primary memory 1n
t it is not dir
that accessible by the CPU.
CeSs

uses input/output channel to

ssecondary storage device. However, itComputer is non-volatile and used to store data
rmanently even though the computer is turned off and the device does not get power.
The data is stored permanently and will
stay on the device until the user erases it or
ie device
is damaged by
any means. It includes hard disk drive, portable flash drives,
Ds, and DVDs, etc. 'The
secondary storage
device can be any of the
Online Storage Media
following:
tis that
part of the computer on which the operating
Dresent as an of the
system is stored and is always
integral part computer for the
disk installed in the storage of data, for example, hard
computer.
n Near-Line Storage Device
It is the optional media, for example, magnetic tape device, that is not a necessary part
of the system. Usage of this
depends on the requirement of the user.
ui Offline Storage Media or Distribution Media
This media is
primarily used for the distribution of data from one computer to another
and so on.For example, pen drive, external hard disc, and C.D.
3. Keyboard
t 1s an input device that is used for input of text or numbers into the computer in
the CUI
(Character User Interface). Keys placed on the Keyboard are in a special
quence, according to the make up and strength of the human hand. The standard
gement ofalphabetic keys is known as Qwerty Keyboard, its name derived from
thearrangement of five keys at the upper left of the three rows of the alphabetic keys.
.
Sound Card and Speakers
present
The present age
ag is the age of multimedia. Therefore, at present, computers are also
pped
equry with a Sound Card and Speakers. With the help of these, music stored as
data in the computer is converted into analog data of sound waves.
digital
1.M and Liquid Crystal Display (LCD) Panel
tor The monitor
1so called "Computer Screen' or Display'. displays the computer's
allowing the user to teract with the computer,
tiorace and open programs, old days, monitors were built 'cathode ray
In using
monitor. CRT monitor is big in size and takes more
hubes using keyboard and mouse.
lend, therefore, called CRT monitors are built using liquid crystal display
space.
Now-a-days
a n d desk thin in size and takesless space and electricity.
d, therefore, monitor. Itis
re, calledLCD
8. Printers
Printers are devices used for producing information as a hard copy, i.e., in a orint.
ted
form. Printers are broadly of two types:

(i) Impact Printers

Printers in which the head of the printer touches the paper during printing are known
as impact printers; for example, Dot Matrix Printers, Line Printers, Wheel Printers
ers,
Chain Printers and Drum Printers.
(i) Non-Impact Printers
These are printers in which the head of the printer does not touch the paper during
printing; for example, Laser printers and Inkjet printers.
2. Software
It is a general term for the various kind of programs used to operate computer and
related devices. Software is a set of instructions on the basis of which a computer
operates. Unlike computer hardware, computer software cannot be seen or touched.
The hypothetical or imaginary part of the computer which is used with hardware to
perform computer applications is known as Software. Computer software can be
divided into following three categories:
(i) Operating Software
Operating Software is a set of specialised programs that makes interface between the
user and the computer hardware.
Operating Software is essential for a computer
system as through it the computer accepts command for operation. It is a set of number
of programs put together that are used for
controlling the resources and the devices
attached to the computer so that they can work under one central
control for their
better and effective use. Operating System is essential to run a
computer. n simple
words, an Operating System acts as the government of a computer system to manage
its for their better and effective use.
resources

Alternatively, the Operating System can be defined as a set of programs, active

the time in the memory of the
computer, to the
all
manage resources of the computer tor
their better and effective use. Example of Operating Software is Windows Software.
(ii) Utility Software
Utility Software is a set of computer programs used to
in a computer. Utility Software perform supporting operation
usually focuses on how the computer infrastructue
(including the computer hardware, operating system,
application software and a
storage) operates. Due to this focus, utilities are often technical
with an advanced level of computer and targeted at peop
knowledge.
Most Utility Softwares are highly specialised and
task or a small range of tasks. However, there are also designed to perform only a sing
some Utility Softwares
combine several Ieatures in one piece of software. wn
Most major operating systems come with several
pre-installed utilities. Like: D
storage, Disk defragmenters, Disk checkers, Disk cleaners, Disk Disk
space analysers, .
titions, Backup,
partitions, Backup, Disk
sk
compression, File managers, Anti-virus, Data compression, pression,et
(ii) Application Software
and developed for
Application Software is the user-oriented program which is designed
and designing. For example,
performing certain jobs, such as accounting, word processing software
install an accounting
ifan enterprise has to maintain its books of account, it will
he will install PageMaker or
such as Tally or Busy. Similarly, if a person has to design,
install Oracle, SQL-server or
CorelDRAW. And, similarly, for database operation one will
My-SQL or Access in Microsoft Office.
business depends on the size and
Accounting software or program used in a

available off-the-shelf are Tally, Busy and

requirements of the organisation. Softwares
softwares.
are the most commonly used accounting
many others. But Tally and Busy
based and designed for use with Windows
The available accounting softwares are data
as the Operating System.
3. Humanwaree
and executing the program or software are
People interacting with the computer will
on the inputs based on which the computer
known as Humanware. They pass
in accordance with a set of instructions, i.e., software.
carry out specified operations
of the computer system:
They constitute the most important part
data processing systems.
As System Analysts-The persons who design
to implement the data processinng
A s ProgrammersThe persons who write programs
system design.
A s Operators--The persons who participate
in operating the computer.
 Role of Computer in Accounting
Or
Softwares used in Accounting
In addition to the above, there are a number ofsoftware packages readily available
in the market which have been particularly designed to suit the accounting necds of a
business. Some of these are as follows
) General Ledger
(1) Accounts Receivable
(II) Accounts Payable
(IV) Inventory Control
(V) Payroll Accounting
A business enterprise can choose any of the above programmes
one or
according
to its requirements.
General Ledger:-Once a transaction is recorded through a Computer,
it is automatically posted to various accounts. As such, the
Ledgers always
contain upto- date informations. Computer prepares a bill or cheque and
once it is prepared
through the Computer, it is automatically recorded,
classified and summarized.
(II) Accounts Receivable :-This software is used to maintain
the upto-date
and accurate accounts of the debtors. This software
is also helpful in
printing periodical reminders to be sent to debtors.
(II) Acounts Payable:-It keeps a upto-date record of all the Creditors.
(IV) Inventory Control:- It keeps a
complete record of receipts and issue of
all the items in the stores. As such, the
information regarding the stock in
hand of each item is readily available.
(V) Pay roll
Accounting:-It prepares the wages and salary sheet of
thousands of employees very
accurately and in no time.
As a result, the
Computers have increased the efficiency of accounting
in many ways. The work which was department
previously
the Computers very quickly and without a
done by hundreds of
clerks is done by
single error. Hence, the use of Computers in
accounting work is increasing day-by-day and very soon, it will be ditticult to locate
an accounting department in a
medium-sized business enterprise which is not using a
Computer.
 Introduction to
Accounting Information System
An Accounting information System is one of the oldest and most
information systems. It is widely used in popular
profit as well as non-profit organizations
because the accounting information that it
provides is used not only by the accounts
department but also by other departments like sales department,
department, human resource department etc. production

Meaning and Definition of Accounting Information System (AIS) :

An accounting information system gathers data describing the
activities, maintains a detailed financial record of the
organisation's
organisations operations,
transforms the data into information and makes the information available to users both
inside and outside the organisation.) An accounting information
system contributes to
 ACCOUNTING SOFTWARES
ccounting Softwares can be
categorised into:
Readymade Softwares;, 2. Customised Softwares; and 3. Tailor-made Softwares.
1.Readymade Software
Readymade Softwares are the softwares that are developed not for any specific user but
for the users in general. Since, the readymade softwares are for general user, it is not
necessary that all the modules of such softwares are of use for every user. It is likely
that a particular module say Payroll may not be used because the enterprise has very
few employees. Similarly, a service enterprise will not require VAT module while a retail
enterprise will not require Service Tax module. Some of the Readymade Softwares available
are Tally, Ex, Busy and Professional Accountant. Out of these, Tally is very widely used.
 2. Customised Software
The term Customised Software means making changes in the readymade software to
suit the specific requirements of the user, i.e., making it user-specitic. The software
available off-the-shelf is modified to suit the requirements of the user. For example, the
design of the invoice is changed to the specifications of the user. "The developer, to meet
specific user requirements, can modify all the readymade softwares. However, the user
has to bear the cost of such changes. The advantages and disadvantages of readymade
SOTtware are also the advantages and disadvantages of Customised Software.
3. Tailor-made Software
The term Tailor-made Software refers to
designing and developing user-specific
software. These softwares, being user-specific. are not available off-the-shelf but
are
developed to meet the requirement of the user on the basis of discussion between the
user and developers.
Comparison of Manual and Computerised Accounting System
Accounting is the process of identifying, recording, clasifying and summaris
financial transactions for preparing financial statements. For making comparative
study, we may discuss these processes under manual as well as computerised
accounting.
Basis of Distinction Manual Accounting Computerised Accounting
In this system, identification of|In this system also
Identifying
Financial financial transactions is done identification of financial
Transactions manually by applying the transactions is done manually
principles of accounting. by applying the principles of
accounting.
 Recording In this sy stem, the recording of In this system, the recording of
transactions in the books of transactions e, storing of data
original entry and related in database is done manualy
calculations such as adding. and all other calculations are
subtraction and totalling are done by computers.
done manually.
Classification In this system, classification In this, the stored data are
ie. posting to ledger accounts processed automatically by the
is done manually software to give us ledger
accounts
Summarising in this system. summarising In this, transactions oncc
ie. balancing of ledger recorded are stored in the
accounts and the preparation of database which will produce
trial balance is done manually trial balance automatically.
Adjustment The identification, recording In this, identification and
Entries and posting of adjustment recording of adjustment entries
entries is done manually is done manually and their
posting ete. is done by software.
Financial In the manual
process. In this, financial statements are
Statements preparation of trial balance is generated from the software
essentia to produce the itself and therefore there is no
financial statements need to prepare a trial halance.

7. Close the In this. closing of books

accounts and transferring
of
of
In this, closing of books of
accounts is done through the
Books
opening balance by recording software and opening balances
opening entries are done are stored in the database.
manually