Unit eight. Accounting and information systems Text 1

International Accounting

The increase in international trade has greatly affected many areas of business. Accounting is one of them. One thorny question is how companies should interpret and present financial information when there are no international standards. The lack of a universal accounting language creates many problems.

Accounting practices now vary from country to country. Thus multinational companies must have a controller in each country where they do business. These controllers must make sure that the company's financial statements conform to their own country's accounting standards and to those of the parent company's country. Also many countries have special accounting requirements that must be met before the company can be listed on local stock exchanges. The process can be very costly and time-consuming. There are just two of the problems that could be solved with standardized international accounting practices.

But installing international standards is not so easy. Many barriers stand in the way. Accounting practices often grow out of government policies on trade tariffs, import-export quotas, and income taxes. Accounting standards also reflect the country's business environment and level of economic development. The standards of industrialized nations with complex financial markets are not suitable for less developed countries. These are just a few of the reasons that developing international accounting standards has been both difficult and frustrating.

To develop global accounting standards the International Accounting Standard Committee (IASC) has been set up. The IASC's board is composed of members from thirteen countries. Its membership represents seventy-eight countries. The IASC strives to set standards that are fair to all of them.

Text 2 Components of Computerized Systems

A computerized information system has two main components: the machines themselves, called hardware, and their instructions, called software.

Hardware. Modern information systems combine computers, printers, terminals and displays, and many other hardware parts. The list of hardware components can seem endless, but there are really only a few main categories: the central processing unit, the auxiliary storage system, the input system, and the output system.

The central processing unit (CPU) is the “brains” of the system. All of the data and calculations are processed here. It has three parts: the arithmetic-logic unit, the main memory, and the control unit. The arithmetic-logic unit (ALU) performs the computing tasks. It does both arithmetic operations (addition, subtraction, multiplication, division) and logical operations (comparisons). The main memory is a temporary storage for the instructions and data that the computer is processing. Instructions and data in main memory are stored in the form of binary numbers (digits). The most common unit of storage is the byte, or eight bits. The control unit interprets program instructions and tells other parts of the computer what to do.

The auxiliary storage system provides long-term storage for programs and data. It usually is some combination of floppy disk drives and hard disk drives. A floppy disk drive stores data on a removable, flexible disk with a magnetic coating and a protective covering. Hard disk drives are non-removable metal disks coated with magnetic material. They can store much more data than floppy disks.

The input system is how data and programs are entered into the computer for processing. Most data is entered into the computer through the keyboard. Some computer systems also have a mouse to ease the task of moving from one place to another on the display during data entry.

The output system provides the results of processing. The main devices are the display screen and the printer. The display screen shows processing results on a TV-like screen. Both text and graphics can be displayed. The printer creates hard copy, a permanent copy of the output, usually on paper.

Software. Computer software, also called a program, is the set of instructions that makes a computer operate at one moment as an accounting machine, at another moment as a drawing board, and at another as a text editing tool. Programs can be created in many different programming languages. The programs that make the computer do the work that its users require are called application software. System software provides certain complicated program routines that are needed by all applications. These program routines are part of a collection of programs called an operating system, which is often marketed by the computer’s maker. The most commonly used microcomputer application software does word processing, graphics, desktop publishing, spreadsheets, data bases, and communications.