A computer system requires procedures to: -

i. Convert the data to machine-readable form.

ii. Input the data into the computer.

iii. Process the data.

iv. Store the data in machine-readable form.

v. Convert the data into a desired output form.

For these procedures, a mixture of hardware and software is needed. The hardware will consist of:

a) Input

b) Processing

c) Storage &

d) Output devices.

Input devices will include: Keyboards, optical readers, and bar code scanners Processing devices are the computers themselves.

Storage devices include: Hard disk, diskettes, and magnetic tape

Output devices include: Visual Display Unit (VDU’s), printers.

The software consists of programmes and operating systems. These contain the instructions that determine how data is to be processed, organised and stored in computer files and then output.

Computer Files

These are the equivalent of books and records in a manual system and are described either as:

1. Transaction files
2. Master files.

Transaction Files

Are the equivalent of journals such as the sales journal or the purchases journal or the cashbook. They contain details of individual transactions, but unlike books, a transaction file is not a cumulative record. A separate file is set up for each batch. Thus in real time systems, a transaction file is not necessary, but good systems will always create a transaction file for control purposes to provide a security back-up, in case of errors or computer malfunctions during processing of data to master file.

Master Files

These contain what is referred to as standing data. They may be the equivalent of ledgers but may also contain semi-permanent data needed to process transactions e.g. a debtors master file will be the equivalent of debtors ledger but will also include data that in a manual system may be kept separately such as invoicing address, discount terms and credit limits, even non-accounting data e.g. cumulative analysis of sales to that customer.

When such master files are up-dated by processing them against a transaction file, the entire contents of the file are usually re-written in a separate location so that after processing, the 2 files can be compared and differences agreed to the control total on the Transaction file. Any errors in updating the master file will thus be detected and the process repeated. In practice, the old copy of the master file and transactions file are retained until the master file is updated once again. This is the grandfather-father-son approach. If the current master file is corrupted or lost due to machine or operator error, previous versions provide back up from which the master file can be re-created. Master files holding semi-permanent data would in the case of debtors system include current sales price list and in the case of personnel department, a personnel file giving details of wage rates, authorised deductions and cumulative record of amounts paid to date for the purpose of providing tax certificates.

A special class of transactions are those amending standing data held in the master file such as sales price and wage rate. These transactions require special control consideration because an error in such data held in a master file will cause errors in all transactions processed against the master file e.g. an item mis-priced in sales price list will mean all sales will be charged to customers at the wrong price.