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Karnataka Class 12 Commerce Accountancy Meaning of Data Processing

Karnataka Class 12 Commerce Accountancy Meaning of Data Processing

Karnataka Class 12 Commerce Accountancy Meaning of Data Processing

Karnataka Class 12 Commerce Accountancy Meaning of Data Processing : Data processing is, generally, “the collection and manipulation of items of data to produce meaningful information. In this sense it can be considered a subset of information processing, “the change (processing) of information in any manner detectable by an observer.”

data processing system is a combination of machines, people, and processes that for a set of inputs produces a defined set of outputs. The inputs and outputs are interpreted as data, facts, information, … depending on the interpreter’s relation to the system. A common synonymous term is “information system”.

A data processing system may involve some combination of:

  • Conversion converting data to another format.
  • Validation – Ensuring that supplied data is “clean, correct and useful.”
  • Sorting – “arranging items in some sequence and/or in different sets.”
  • Summarization – reducing detail data to its main points.
  • Aggregation – combining multiple pieces of data.
  • Analysis – the “collection, organization, analysis, interpretation and presentation of data.”.
  • Reporting – list detail or summary data or computed information.

Karnataka Class 12 Commerce Accountancy Meaning of Data Processing

General: Operations performed on a given set of data to extract the required information in an appropriate form such as diagrams, reports, or tables. See also electronic data processing.

Computing: Manipulation of input data with an application program to obtain desired output as an audio/video, graphic, numeric, or text data file.

Electronic Data Processing – EDP (electronic data processing), an infrequently used term for what is today usually called “IS” (information services or systems) or “MIS” (management information services or systems), is the processing of data by a computer and its programs in an environment involving electronic communication. EDP evolved from “DP” (data processing), a term that was created when most computing input was physically put into the computer in punched card form and output as punched cards or paper reports.

Karnataka Class 12 Commerce Accountancy Meaning of Data Processing

Each organisation, regardless of its size or purpose, generates data to keep a record of events and transactions that take place within the business. Generating and organising this data in a useful way is called data processing. In this lesson, we shall discuss about various terms such as data, information, data processing and data processing system.

Data processing is the act of handling or manipulating data in some fashion. Regardless of the activities involved in it, processing tries to assign meaning to data. Thus, the ultimate goal of processing is to transform data into information.

Data processing is the process through which facts and figures are collected, assigned meaning, communicated to others and retained for future use. Hence we can define data processing as a series of actions or operations that converts data into useful information. We use the term ‘data processing system’ to include the resources that are used to accomplish the processing of data.

As discussed above, data processing consists of those activities which are necessary to transform data into information. Man has in course of time devised certain tools to help him in processing data. These include manual tools such as pencil and paper, mechanical tools such as filing cabinets, electromechanical tools such as adding machines and typewriters, and electronic tools such as calculators and computers.

Many people immediately associate data processing with computers. As stated above, a computer is not the only tool used for data processing, it can be done without computers also. However, computers have outperformed people for certain tasks. There are some other tasks for which computer is a poor substitute for human skill and intelligence.

Karnataka Class 12 Commerce Accountancy Meaning of Data Processing

The Data Processing Cycle

The data processing activities described above are common to all data processing systems from manual to electronic systems. These activities can be grouped in four functional categories, viz., data input, data processing, data output and storage, constituting what is known as a data processing cycle.

(i) Input : The term input refers to the activities required to record data and to make it available for processing. The input can also include the steps necessary to check, verify and validate data contents.

(ii) Processing : The term processing denotes the actual data manipulation techniques such as classifying, sorting, calculating, summarizing, comparing, etc. that convert data into information.

(iii) Output : It is a communication function which transmits the information, generated after processing of data, to persons who need the information. Sometimes output also includes decoding activity which converts the electronically generated information into human-readable form.

(iv) Storage : It involves the filing of data and information for future use. 

Karnataka Class 12 Commerce Accountancy Meaning of Data Processing

Computer Processing Operations

A computer can perform only the following four operations which enable computers to carry out the various data processing activities we have just discussed.

(a) Input/Output operations : A computer can accept data (input) from and supply processed data (output) to a wide range of input/output devices. These devices such as keyboards, display screens, and printers make human-machine communication possible.

(b) Calculation and text manipulation Operations : Computer circuits perform calculations on numbers. They are also capable of manipulating numerics and other symbols used in text with equal efficiency.

(c) Logic/Comparison Operations : A computer also possesses the ability to perform logic operations. For example, if we compare two items represented by the symbols A and B, there are only three possible outcomes. A is less than B (A<b); a=”” is=”” equal=”” to=”” b=”” (a=”B):” or=”” greater=”” than=””>B). A computer can perform such comparisons and the, depending on the result, follow a predetermined path to complete its work. This ability to compare is an important property of computers.

(d) Storage and Retrieval Operations : Both data and program instructions are stored internally in a computer. Once they are stored in the internal memory, they can be called up quickly or retrieved, for further use.

Karnataka Class 12 Commerce Accountancy Meaning of Data Processing

The activity of data processing can be viewed as a “system”. According to James O’brien a system can be defined as “a group of interrelated components that seeks the attainment of a common goal by accepting inputs and producing outputs in an organised process”. For example, a production system accepts raw material as input and produces finished goods as output. Similarly, a data processing system can be viewed as a system that uses data as input and processes this data to produce information as output.


There are many kinds of data processing systems. A manual data processing system is one that utilizes tools like pens, and filing cabinets. A mechanical data processing system uses devices such as typewriters, calculating machines and book-keeping machines. Finally, electronic data processing uses computers to automatically process data.

Having discussed the Data Processing Cycle (also called Information Processing Cycle) and the components of a computer, we will now describe how data is organised before processing on a computer. Data can be arranged in a variety of ways, but a hierarchical approach to organisation is generally recommended.

Karnataka Class 12 Commerce Accountancy Meaning of Data Processing

Data Item : A data item is the smallest unit of information stored in computer file. It is a single element used to represent a fact such as an employee’s name, item price, etc. In a payroll application, the employee number 170 is a data item. PANKAJ the name is a data item.

Field : Data items are physically arranged as fields in a computer file. Their length may be fixed or variable. Since all individuals have 3 digit employee numbers, a 3-digit field is required to store the particular data.

Hence, it is a fixed field. In contrast, since customer’s name vary considerably from one customer to another, a variable amount of space must be available to store this element. This can be called as variable field.

Record  : A record is a collection of related data items or fields. Each record normally corresponds to a specific unit of information.

File : The collection of records is called a file. A file contains all the related records for an application. Files are stored on some medium, such as floppy disk, magnetic tape or magnetic disk.

Database : The collection of related files is called a database. A database contains all the related files for a particular application.

Karnataka Class 12 Commerce Accountancy Meaning of Data Processing

Meaning of Data Processing :  Refers to a class of programs that organize and manipulate data, usually large amounts of numeric data. Accounting programs are the prototypical examples of data processing applications. In contrast, word processors, which manipulate text rather than numbers, are not usually referred to as data processing applications.

Meaning of Data Processing : Same as Information Technology (IT), refers to all computing functions within an enterprise.

Karnataka Class 12 Commerce Accountancy Meaning of Data Processing

Data processing

  • manipulation of data into a more useful form
  • Includes; numerical calculation, operations (e.g. classification of data), transmission of data from one place to another

Organizations undertake data processing activities to obtain information with which to control and support the following;

  • Production/operations e.g. manufacturing resource planning, manufacturing execution systems, process control
  • Marketing activities e.g. customer relationship management, interactive marketing, sales force automation etc.
  • Human Resource Management e.g. compensation analysis, employee skills inventory, personnel requirements forecasting
  • Financial activities e.g. cash management, credit management, investment management, capital budgeting
  • Accounting activities: order processing, inventory control, accounts receivable, accounts payable, payroll, general ledger

The processing cycle

  • Two types of processing cycles

          Basic Data Processing cycle and

          The Expanded Data Processing cycle

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Karnataka Class 12 Commerce Accountancy Meaning of Data Processing

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  • Class 12 Accountancy Text book
  • Need for Maintaining of Accounts books by Non Profit Organisation

  • Accounting book 1

  • Accounting book 2
  • Accounting book 3

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