The computer software consists of programs and operating systems.

Programs are the instructions telling the computer how each type of transaction is to be processed. These instructions include routines of checking and controlling data, matching data with master files and performing mathematical operations on data. E.g. for sales transactions, matching routines will enable the computer to identify the right sales price from the sales master file and the right customer from debtors master file. Mathematical routines will include calculating the total debtor‘s amount and updating customer‘s balance in the debtor’s master file.

Operating system relates to a series of related programs to provide instructions as to what files are required to be on-line, what output devices are required to be ready and what additional file need to be created for further processing. E.g. with a batch of sales
transactions, the sales price file and debtor‘s file need to be on-line. The printer must be loaded with blank invoice forms and the totals must be retained for posting to the sales and debtors control accounts in the general ledger master file.

An operating system will provide details of further processing runs within the system. So, for example, in sales these will include updating the general ledger, processing cash receipts and credit notes to the debtor‘s file, printing out monthly statements and printing out analysis of due accounts for credit control purposes. In a batch processing system, the operating system may consist of a set of instructions provided to the operator but increasingly the operating system is part of the computer software such that with real time system, the computer identifies source of an incoming signal and automatically processes that transaction using the appropriate programs and the right file.

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