Computer System

Introduction to Computer System

In modern days, the computer has gained its own importance in every sphere. It has taken over all the markets, businesses, and professions. It has become a major requirement for every business sector today. It is generally regarded as the lifeline of modern business-like blood is required for the efficient functioning of our body, in the same way, computers are required for the smooth running of any type of business. In the accounting context too, computers are used to process a large amount of data to perform speedy calculations and to generate various accounting reports.

Definition of Computers

International Standard Organisation has defined computers as follows:

“A computer is a data processor that can perform substantial computations, including numerous arithmetic and logic operations, without the intervention of a human operator during the run.”

Meaning of Computer System

Computer System is an electronic machine that is used to process raw data into meaningful information required by the users. It works on a set of instructions that are programmed into it in the form of software which helps them in processing the data and producing information as per the requirement.

Elements of Computer System

A computer system is mainly composed of six elements namely, hardware, software, people, procedures, data, and connectivity. A detailed explanation of all these elements is given below.


It includes all the physical components of a computer such as a keyboard, mouse, monitor, processor, etc. These components can be touched and the user inputs command using these components.


A set of programs that enables a computer to perform its tasks or commands given by the user. There are the following six types of software.

Operating System: It is an integrated set of specialized programs that are meant to manage and control the resources of a computer. They make the computer user–interactive, i.e. user-friendly. It means that the operating system forms an interactive link between the user and the computer hardware. For example, Windows, Linux, etc.

Utility Programs: Utility Programs refer to a set of pre-written computer programs that are designed to perform certain supporting operations. Most of the utility software is highly specialized and is specially designed to perform a single task or a small range of tasks. For example, virus scanners, system profilers, etc.

Application Software: These are user-oriented programs that are designed and developed for performing certain specified tasks. For example, Microsoft Word, Flash Player, Skype, etc.

Language Processors: These are the software that interprets or translates program language into machine language. For example, COBOL Processor, Fortran Processor, etc.

System Software: These are the software that controls the internal functions of the system such as reading data from the input devices.

Connectivity Software: This is the software that creates and controls the connection between a computer and a server with the purpose of sharing the data.


It constitutes the most important part of a computer system. It basically refers to the individuals or the users who interact with the computer through the use of hardware and software. The following are the people who are involved with a computer system.

System Analysts: They are the people who design the data processing system.

Operators: They are the people who write programs to implement the data processing system.

Programmers: They are the people who participate in operating the computers.


A series of operations that are executed in a certain manner in order to achieve the desired set of results are known as ‘Procedures’. There are mainly three types of procedures, which are as follows:

Hardware-oriented Procedures: Hardware Oriented Procedures provide details about various components of a computer and their uses.

Software-oriented Procedures: Software Oriented Procedures provide a detailed set of instructions required for using the software of a computer system.

Internal Procedures: These procedures help in sequencing the operation or working of each sub-set of the overall computer system.


The facts that are gathered and entered into a computer system are known as ‘Data’. It may comprise numbers, text, graphics, etc.


This refers to the manner in which a computer system is connected to other electronic devices through telephone lines, microwave transmission, satellite links, etc., which is known as ‘Connectivity’.

Components of Computer

A computer system has three main components as given below:

  • Input Unit
  • Processing Unit or Central Processing Unit (CPU)
  • Output Unit

The given below is a diagrammatic presentation of these components.

Input Unit

This unit controls those devices which are used to transfer inputs in a computer system such as Keyboard, Mouse, CD ROM, Magnetic Ink Character Recognition (MICR), Barcode Reader, Smart Card Reader, and Touch Screen Feature.

Processing Unit or Central Processing Unit (CPU)

It is generally referred to as the brain of a computer system, which performs all the tasks related to the processing of data, storage, and retrieval of information. It is also known as Central Processing Unit. It is sub-divided into three parts:

  • Arithmetic and Logic Unit (ALU): It does all the mathematical (or arithmetical) calculations in a computer system. For example, multiplication, addition, subtraction, division, and logical operations.
  • Memory Unit: It helps in storing data that is not processed immediately.
  • Control Unit: It helps in the control and coordination of all the other units of a computer system.

Output Unit

The data when processed by a computer becomes information but to display this information to the users in a readable form certain devices are required which are known as output devices. This unit plays an important role in making information available to its users in an understandable form.

Other important Components of the Computer Hardware

We have different body parts performing various functions for us similarly a computer has a number of components that together form a system. These are as follows:

Motherboard: It is one of the most vital components of the computer system. Also known as the mainboard or logic board, it connects a whole gamut of computer devices like Central Processing Unit (CPU), RAM, etc. Hence, it has a whole lot of slots like slots for USBs (pen drive), RAM expansion slots, etc. Like the wiring in our brain, the motherboard has many circuits take to make a computer work and enables it to perform various functions.

Random Access Memory (RAM): It is the primary memory of a computer that stores information in binary language i.e. in zeros or ones. But is volatile in nature because it can be accessed only till the time the system is on. RAM is normally in the form of small chips in the motherboard which are used to trace the location of a particular data and access it within certain milliseconds. However, it can store only a limited amount of data at any point in time like MS Office application, etc. Due to its volatile nature, it can easily get erased when a device is rebooted.

Keyboard: We already know by now, that a computer has certain input devices that are used to feed instructions into a computer and certain output devices that show the results. The keyboard is one such input device that has all the 26 alphabets of the English language arranged in a way commonly referred to as the QWERTY keyboard. Hence, it is used to enter text or numbers into the system.

Sound card and Speakers: When you play a song on your computer, a voice magically appears. This is because every device has a sound card and a speaker which performs the function of converting the digital data stored in the form of music into analog data of sound waves.

Computer Screen: Also commonly called Monitor, this component helps us in interacting with the system by displaying the required content on the screen.

Printers: This device enables us to convert the soft copy of our data stored in the system into a hard copy or printed format.

Benefits of Computer System

The given below are the various advantages of computer system

Accuracy: Output or information produced by a computer system assures a high degree of accuracy, provided the input is correct. The computations and operations performed by a computer are highly accurate and correct. As computer works on the basis of a set of instructions given to it in the form of programming software, so if the software is error-free then definitely output will be highly accurate.

Speed: Computer systems perform operations at a much faster speed as compared to human beings. It takes far less time than the manual systems in performing a task. Modern computers can perform 100 million calculations per second.

Reliability: A computer’s efficiency is not affected by a huge quantity of work pressure, long working hours, or monotony. Often people get tired, lack concentration, and feel stressed while working on a huge volume of data that involves tedious calculations. Computer systems help overcome these limitations easily. A computer can perform multiple tasks with great precision and accuracy, thereby making the results highly reliable.

Versatility: Computers are specialized in doing various tasks simultaneously and with the same efficiency no matter how complex the tasks are. Nowadays, computers are used in different areas to perform a variety of functions such as telecommunications, hotels, retail stores, scientific laboratories, statistical purposes, cinema halls, etc. As it is catering to the different needs of each sector so this shows its versatile advantage.

Storage: Computers have a huge storage capacity and can store safely a huge volume of data in a very small physical space. For example, a typical mainframe computer can store billions of characters and thousands of graphic images.

Limitations of Computer System

Although a computer system has various advantages, yet it suffers from certain limitations, which are listed below:

Has no mind: The computer system works as per the set instructions or commands were given to it. Unlike Human Beings, it does not have any common sense. So, if wrong instructions are given to it by human beings, it will work accordingly without applying its mind.

Lack of Intelligence: A computer system cannot perform a task on its own. It has to be programmed with a set of instructions to perform a particular function. Also, in case of any unforeseen condition, it cannot decide what exactly is to be done unless they are instructed to handle such a situation.

Cannot take its own decisions: As decision making involves analyzing data, comparison with already available data, and analysis of the present environment, it, therefore, requires intellectual mind, alertness, common sense, and intelligence. Since computers work on a set of instructions given, thus it lacks all the above features that are required for quality decision making.

Also, Read

Interest on Capital

Any interest paid on capital is considered as an expense and is shown in the Profit and Loss Account. Treatment of interest on capital in the final accounts is as follows.

Interest on Drawings

Treatment of interest on drawings in the final accounts is as follows. Firstly, interest in drawings is shown on the credit side of the Profit and Loss Account.

What is Operating Profit?

Operating Profit can be defined as the profit earned by carrying the normal business activities. It is computed by subtracting the operating expenses from the gross profit.

Balance Sheet

The balance sheet is the last financial statement that is prepared by any organization. This statement helps to ascertain the true financial position of an enterprise at the end of an accounting period

Profit and Loss Account

A profit and Loss Account is the second financial statement prepared by an organization. This account is prepared to ascertain the net results of a firm in form of net profit earned or net loss incurred during an accounting period.

What are Adjusting Entries?

In order to incorporate adjustments in the financial statements, we pass the required Journal entries, which are termed as adjusting entries.

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