Page 1 - Lesson Note

CHAPTER-21
COMPUTERS IN ACCOUNTING
Meaning of Computers: A computer is an electronic device, which is capable of
performing a variety of operations as directed by a set of instructions. This set of
instructions is called a computer programme.
Elements of Computer System:
A computer system is a combination of six elements:

1. Hardware
2. Software
3. People
4. Procedure
5. Data
6. Connectivity
1. Hardware: Hardware of computers consists of physical components such as
keyboard, mouse, monitor, processor etc. These are electronic and electromechanical
components.
2. Software: In order to solve a particular problem with the help of computers, a
sequence of instructions written in proper language will have to be feed into the
computers. A set of such instructions is called a ‘Program’ and the set of programs is
called ‘Software’.
For example, a computer by feeding a particular software can be used to prepare
pay-roll, whereas by feeding a second software it can be used to prepare accounts,
by feeding a third software it can be used for inventory control and so on.

3. People: People are basically those individuals who use hardware and software to
develop, maintain and use the information system residing in the computer memory.
They constitute the most important part of the computer System. The main
categories of people involved with the computer system are:
(a) System Analysis
(b) Operators
(c) Programmers
4. Procedures: The Procedure means a series of operations in a certain order or
manner to achieve desired results. These are of three types:
(a) Software-Oriented: Provides a set of instructions required for using the software
of a computer system.
(b) Hardware-Oriented: Provides details about the components and their methods
of operations.
(c) Internal Procedure: Helps to ensure smooth flow of data to computers
sequencing the operations of each sub-system of overall computer system.
5. Data: These are facts (may consist of numbers, text etc.) gathered and entered
into a computer system. The computer system in turn stores, retrieves, classifies,
organises and synthesis the data to produce information when desires.
Examples: