Generally speaking soft skills are the skills an individual has in relation to their Emotional Intelligence Quotient, their ‘EQ’. These cover a breadth of skills including communications, interpersonal skills and how an individual builds and maintains relationships with others. In a project environment getting others to work with you towards a common goal is a foundation stone to delivering a project.
The 12 essential behaviours for project managers are:
* Communication and Consultation
* Conflict and Crisis Management
* Flexibility and Creativity
* Learning and Development
* Organisational Effectiveness
* Problem Solving and Decision Making
* Professionalism and Ethics
Communication and Consultation: Interacting with people about ideas, thoughts, facts, emotions, challenges, successes, etc. alongside hard facts such as project progress. Having the ability to convey complex ideas easily; clearly articulate what must be accomplished; keep the team moving toward a common goal; and to foster an environment that allows team members to communicate openly and honestly.
Conflict and Crisis Management: Listening and responding to the needs and views of all team members to anticipate any potential areas of conflict. The ability to diffuse situations where conflict has risen maintains a healthy project environment.
Flexibility and Creativity: Thinking in original and imaginative ways to widen the scope of problem solving when issues arise. Encourage project teams to find the best solution and outcomes without slavishly following generic delivery methods or solutions. Adapting a project’s different components, templates, tools, and techniques.
Leadership: Understanding the vision and direction of the project and aligning the team to work towards it. Skills include delegating, coaching, motivating and leading by example.
Learning and Development: Continual improvement of both your own skills and those of your team. Assessment of skills and capabilities, encouraging participation in learning activities and evaluating how the learning is applied in the project environment.
Negotiation: Analysis of information, decision making, establishing the desired outcome and developing a strategy for the negotiation alongside understanding the optimal outcome from several options. Gaining agreement through consensus of positions from both parties.
Organisational Effectiveness: Understanding and applying people management processes and policies. Understanding the corporate culture, the organisational dynamics, and the individuals that work within it lead to getting the best from your team.
Problem Solving and Decision-Making: Resolving issues and solving problems that are a normal part of every project.
Professionalism and ethics: Demonstrated through knowledge, skills and behaviour alongside appropriate conduct and moral principles for both the organisation’s and project’s environments.
Trustworthiness: Do what you say you’re going to do. Build trust with stakeholders involved and convey they can be trusted day-to-day to do what is right at the right time to keep the project successful and the Sponsor satisfied.
Self-control: Self-control and self-management to ensure day to day stresses are addressed and a work / life balance maintained.
Teamwork: Creating a team atmosphere where the team believes that ‘we are all in this together’ is a critical component to project success.
Cloud computing is a general term for anything that involves delivering hosted services over the Internet. These services are broadly divided into three categories: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). The name cloud computing was inspired by the cloud symbol that’s often used to represent the Internet in flowcharts and diagrams.
Cloud computing comes into focus only when you think about what IT always needs: a way to increase capacity or add capabilities on the fly without investing in new infrastructure, training new personnel, or licensing new software. Cloud computing encompasses any subscription-based or pay-per-use service that, in real time over the Internet, extends IT’s existing capabilities.
There’s a good chance you’ve already used some form of cloud computing. If you have an e-mail account with a Web-based e-mail service like Hotmail, Yahoo! Mail or Gmail, then you’ve had some experience with cloud computing. Instead of running an e-mail program on your computer, you log in to a Web e-mail account remotely. The software and storage for your account doesn’t exist on your computer — it’s on the service’s computer cloud.
When talking about a cloud computing system, it’s helpful to divide it into two sections: the front end and the back end. They connect to each other through a network, usually the Internet. The front end is the side the computer user, or client, sees. The back end is the “cloud” section of the system.
The front end includes the client’s computer (or computer network) and the application required to access the cloud computing system. Not all cloud computing systems have the same user interface. Services like Web-based e-mail programs leverage existing Web browsers like Internet Explorer or Firefox. Other systems have unique applications that provide network access to clients.
On the back end of the system are the various computers, servers and data storage systems that create the “cloud” of computing services. In theory, a cloud computing system could include practically any computer program you can imagine, from data processing to video games. Usually, each application will have its own dedicated server. A central server administers the system, monitoring traffic and client demands to ensure everything runs smoothly. It follows a set of rules called protocols and uses a special kind of software called middleware. Middleware allows networked computers to communicate with each other. Most of the time, servers don’t run at full capacity.
If a cloud computing company has a lot of clients, there’s likely to be a high demand for a lot of storage space. Some companies require hundreds of digital storage devices. Cloud computing systems need at least twice the number of storage devices it requires to keep all its clients’ information stored. That’s because these devices, like all computers, occasionally break down. A cloud computing system must make a copy of all its clients’ information and store it on other devices. The copies enable the central server to access backup machines to retrieve data that otherwise would be unreachable. Making copies of data as a backup is called redundancy.
Cloud computing providers offer their services according to three fundamental models: Infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS) where IaaS is the most basic and each higher model abstracts from the details of the lower models.
Infrastructure as a Service (IaaS)
In this most basic cloud service model, cloud providers offer computers – as physical or more often as virtual machines –, raw (block) storage, firewalls, load balancers, and networks. IaaS providers supply these resources on demand from their large pools installed in data centers. Local area networks including IP addresses are part of the offer. For the wide area connectivity, the Internet can be used or – in carrier clouds – dedicated virtual private networks can be configured.
To deploy their applications, cloud users then install operating system images on the machines as well as their application software. In this model, it is the cloud user who is responsible for patching and maintaining the operating systems and application software. Cloud providers typically bill IaaS services on a utility computing basis, that is, cost will reflect the amount of resources allocated and consumed.
Platform as a Service (PaaS)
In the PaaS model, cloud providers deliver a computing platform and/or solution stack typically including operating system, programming language execution environment, database, and web server. Application developers can develop and run their software solutions on a cloud platform without the cost and complexity of buying and managing the underlying hardware and software layers. With some PaaS offers, the underlying compute and storage resources scale automatically to match application demand such that the cloud user does not have to allocate resources manually.
Software as a Service (SaaS)
In this model, cloud providers install and operate application software in the cloud and cloud users access the software from cloud clients. The cloud users do not manage the cloud infrastructure and platform on which the application is running. This eliminates the need to install and run the application on the cloud user’s own computers simplifying maintenance and support. What makes a cloud application different from other applications is its elasticity. This can be achieved by cloning tasks onto multiple virtual machines at run-time to meet the changing work demand. Load balancers distribute the work over the set of virtual machines. This process is transparent to the cloud user who sees only a single access point. To accomodate a large number of cloud users, cloud applications can be multitenant, that is, any machine serves more than one cloud user organization. It is common to refer to special types of cloud based application software with a similar naming convention: desktop as a service, business process as a service, Test Environment as a Service, communication as a service.
Cloud storage advantages
- Companies need only pay for the storage they actually use as it is also possible for companies by utilizing actual virtual storage features like thin provisioning.
- Companies do not need to install physical storage devices in their own datacenter or offices, but the fact that storage has to be placed anywhere stays the same (maybe localization costs are lower in offshore locations).
- Storage maintenance tasks, such as backup, data replication, and purchasing additional storage devices are offloaded to the responsibility of a service provider, allowing organizations to focus on their core business, but the fact stays the same that someone has to pay for the administrative effort for these tasks
- Cloud storage provides users with immediate access to a broad range of resources and applications hosted in the infrastructure of another organization via a web service interface.
Six Benefits of Cloud Computing :
- Reduced Cost
Cloud technology is paid incrementally, saving organizations money.
- Increased Storage
Organizations can store more data than on private computer systems.
- Highly Automated
No longer do IT personnel need to worry about keeping software up to date.
Cloud computing offers much more flexibility than past computing methods.
- More Mobility
Employees can access information wherever they are, rather than having to remain at their desks.
- Allows IT to Shift Focus
No longer having to worry about constant server updates and other computing issues, government organizations will be free to concentrate on innovation.
Microsoft Dynamics NAV is an enterprise resource planning (ERP) software product from Microsoft.
The product is part of the Microsoft Dynamics family, and intended to assist with finance, manufacturing, customer relationship management, supply chains, analytics and electronic commerce for small and medium-sized enterprises. Value-added resellers (VAR)s can have full access to the business logic source code, and it has a reputation as being easy to customize.
Navision versions from 3.00 onwards were:
- Navision Solutions 3.00: 3.00
- Navision Attain 3.01: 3.01
- Navision Attain 3.10: 3.10
- Navision Attain 3.60: 3.60, 3.60A
- Microsoft Business Solutions Navision 3.70: 3.70, 3.70A, 3.70B
- Microsoft Business Solutions NAV 4.00: 4.00, 4.00 SP1, 4.00 SP2, 4.00 SP3
- Dynamics NAV 5.00: 5.00, 5.00 SP1
- Dynamics NAV 2009: (aka NAV 6.00) 2009, 2009 SP1, 2009 R2 (R2 was released in 2011)
- Dynamics NAV 7: Projected for release in September / October 2012
Microsoft Dynamics Navision delivers integrated functionality to provide support for:
- Financial management
- Supply chain management
- Customer relationship management
- Sales and marketing
- Service management
The core of Microsoft Navision is the Client/Server Integrated Development Environment (C/SIDE). C/SIDE is the foundation for all the business management functionality of Microsoft Navision. It is made up of seven building blocks, called object types, which are used to create the application. These seven object types are shared throughout Microsoft Navision to create every application area, and give it a unified, consistent interface.
C/SIDE makes the application code open to developers so that Microsoft Navision fits to your unique way of doing business.
Your Microsoft Certified Business Solutions Partner can customize the Microsoft Navision application code so that all the application areas support the particular routines, processes, and methods your employees use throughout your business.
Any level of customization is possible with Microsoft Navision. C/SIDE can be customized to support the simplest workflows of individual employees – how they organize their data and the steps they go through to complete their tasks – as well as that of a whole department.
To customize Microsoft Navision is possible to Microsoft Certified Business Solutions Partner because the source code in C/SIDE is open to them. It provides just as much functionality as competitor’s products but with fewer lines of code for your Microsoft Certified Business Solutions Partner to work through. So you get the tailored Microsoft Navision solution you need, when you need it. Microsoft Navision has all the tools you need to maintain it at its most robust and adaptable level.
Internal Tools: Client Monitor, Code Coverage, and Microsoft Navision Debugger
The Client Monitor is a tool that identifies performance and locking problems between the database and the client computers that your employees use. It can be used together with Code Coverage, a tool that shows what code is executed when using Microsoft Navision. The Microsoft Certified Business Solutions Partner can use it to see whether the database has been locked, which prevents employees from completing tasks at the same time.
Code Coverage is used for debugging Microsoft Navision and testing the code. Together, these tools help maintain a high quality and level of concurrency, so that your employees can all work productively with a reliable database.
Microsoft Navision Debugger is a tool to help you in the process of checking, correcting, or modifying code so that Microsoft Navision can build, run smoothly, and act as you expect.
C/ODBC and C/FRONT
Both C/ODBC and C/FRONT enable you to easily use information from Microsoft Navision in familiar programs, such as Microsoft® Word® and Microsoft® Excel®.
The Open Database Connectivity driver for Microsoft Navision (C/ODBC) is an application program interface (API) that provides a way for other applications, such as the entire Microsoft® Office® Suite, to send and retrieve data to and from the Microsoft Navision database through the ODBC interface.
One example of C/ODBC functionality is sending letters to customers. Working from Microsoft Word, you can build queries that let you extract data directly from the Microsoft Navision database. For example, using data in the Customer table, you can create letters notifying customers that they have reached a bonus level where a rebate has been earned.
C/FRONT is a tool that opens up the Microsoft Navision database and allows the Microsoft Certified Business Solutions Partner to develop third-party programs that can access the database. For example, if you want to build a procedure for assembling budgets with spreadsheet functionality, the Microsoft Certified Business Solutions Partner can configure Microsoft Excel to control the transfer of data from the Microsoft Navision database. Figures can then be seamlessly read from Microsoft Navision, manipulated in Excel, and written back to the database.
Both C/ODBC and C/FRONT remove the time-consuming steps of importing and exporting data, so that information can flow seamlessly between applications.
The Windows-based design of Microsoft Navision makes it easy for employees to work efficiently with the solution. Every application area contains online Help so employees can navigate their way through the solution. A personalized home page for every employee with all the information they need helps them stay focused on their work and complete tasks in better time.
A unique feature of the database is SumIndexFields (SIFT). SIFT enables the database to rapidly perform numerous calculations on complex data. With SIFT, calculating sums for numeric columns in tables is extremely fast, even in tables that contain millions of records. SIFT not only instantaneously calculates totals, it allows you to break down those totals so you can see where they came from. Therefore, you can easily go in-depth with data and manipulate sums, figures, and statistics as you need to.
The Microsoft Navision Database Server supports the unity throughout Microsoft Navision, which means if you are working in one part of the application, you can easily switch to another area without exiting the system. You’ll save time, effort, and you will more easily be able to stay focused on your work.
Microsoft Navision Database Server is also easy to set up and configure. It doesn’t require a lot of maintenance or expensive hardware. You do not need a dedicated person maintaining it. Once the server is installed, you can leave it alone, let it go to work and focus on your business.
Microsoft Navision can also run on Microsoft® SQL Server®.You can integrate Microsoft Navision with applications you were using before you implemented it.OLAP allows Microsoft SQL Server to draw upon table relations within Microsoft Navision, enabling a multidimensional view of data. For example, you could analyze data collected from your e-commerce site to better gauge customers’ buying patterns. With these tools, you can make informed and precise plans for new marketing campaigns, target individuals or a group of customers, and be aware of new trends concerning your customers and products.
Microsoft Navision makes it extremely easy for your partners, customers and vendors to do business with you. It uses the Internet and XML to exchange and distribute information easily and cost-effectively. It helps you bring in new partners and customers, while reducing costs internally and helping employees to work more efficiently. The new XMLport objects in Microsoft Navision allow you to easily exchange documents with your business partners. In addition, XMLports improve the overall performance of the solution when handling XML document exchanges and they enable easier customization of data exchange with Microsoft Navision.
Commerce Portal is an Internet-based solution within Microsoft Navision. It provides a company’s customers and business partners with an online Web portal containing all the relevant information and services needed to carry out commercial transactions with each other.
Extensible Business Reporting Language (XBRL) for Microsoft Navision enables simple and dependable distribution of all a company’s financial information and ensures smooth and accurate data transfer. XBRL is an XML-based specification that uses accepted financial reporting standards and practices to export financial reports across all software and technologies, including the Internet.
XBRL lets you easily distribute financial information.
You can map the information directly from your Microsoft Navision General Ledger to the XBRL tags. For example, if you need to submit your figures for approval of a loan, you can simply export the required data using XBRL with its underlying XML-based tags, and the bank and the receiving system will import your information automatically.
With XBRL, presenting your financial information on the Web becomes a natural step in your financial information supply chain. It is useful for investor-dependent companies or for new companies that are trying to nurture new investor attention because it will be easy for analysts not only to view but also receive information.
- Object-oriented development environment
- Made up of seven object types used to create the functionality of the application
- Open application code: Microsoft Certified Business Solutions Partners can customize a solution on both simple and complex levels
- Minimal amount of code: Fewer lines of code than competitor’s products
- Consistent interface throughout the whole application – easy to switch from one application area to another
- Automation controller provides a way to access the functionality of external applications, such as Microsoft Excel, from within Microsoft Navision
MICROSOFT NAVISION DEVELOPER’S TOOLKIT
- Merge and compare functionality: compare old base version of Microsoft Navision, with your customized version, and finally, with the new version of Microsoft Navision. Then you can merge versions, including all customized features, to get your upgraded version of Microsoft Navision.
- Supports Microsoft SQL Server, making it possible to manage a full upgrade of your system, including all product versions and the results from the compare and merge functionality, in one single database.
- Source Analyzer is used as a cross-reference tool for finding relations between objects. It can also find where a given object, field, property, and so on, is used in Microsoft Navision.
- Pull objects directly out of Microsoft Navision. No exporting and importing required.
- Analyzes a particular task, and studies the database server calls resulting from the task as well as the code that initiates the server calls.
- Displays all the details of the database server calls by the current client, including the time spent on each database server call.
- Gathers and displays all the database function calls that are made by the C/AL code as well as the database server calls that are made indirectly, for example, by opening a form.
- Identifies which objects have been involved in an action and which lines of code have been executed.
MICROSOFT NAVISION DEBUGGER
- The basic concept of the debugger is the breakpoint: a mark that your Microsoft Certified Business Solutions Partner can set on a code statement. When the program execution reaches the statement, the debugger will intervene and suspend the execution of the statement until it is instructed to go on.
- Type of code identified with different colors, so your Microsoft Certified Business Solutions Partner can easily see what kind of code they’re working with while debugging.
MICROSOFT NAVISION APPLICATION SERVER
- Reuse of business logic: When you are working in another application but require information from Microsoft Navision, the application server ensures you will receive it in the same logical ways as if you were working right from a Microsoft Navision client.
In Commerce Gateway:
- Connects the Microsoft Navision database with other components, such as Microsoft BizTalk Server.
- Automates some key steps in the processing of sales and purchase orders.
In Commerce Portal:
- Helps handle the communication between Microsoft Navision and the Web portal.
- Posting orders: Instead of waiting for a posting to be completed, you can send a message to the application server to do the posting for you.
- Automatically logs errors in an event log and continues with processing.
- Automatically restarts on its own when you reboot Microsoft Navision.
- Works with numerous standard applications, such as the Microsoft Office suite of programs.
- Gives read access to the C/SIDE database.
- Gives write access to the C/SIDE database via a temporary file.
- Gives read and write access to the C/SIDE database.
- Allows the development of sophisticated add-on programs in C++.
- Provides two API formats: the C-API and OCX-API. The C-API format allows programs developed using the C and C++ programming languages to access C/SIDE directly, using a dynamic link library (DLL). The OCX-API format enables access to C/SIDE by any program that can act as an Automation client.
- Provides a directory service for distributed networking environments.
- Enables you to create multiple copies of a directory and place them throughout a network.
- Keeps information on personal settings, such as how you like to set up tables, so when you work in Microsoft Navision from a different PC, your personal settings will be maintained.
- Acts as a registry for various parts or areas of the network.
MICROSOFT NAVISION DATABASE SERVER
- Supports high level of concurrency with the version principle. Each time a transaction is committed, a new version of the database is created. The Database Management System (DBMS) allows different applications to access and modify the database concurrently.
- SIFT has been designed to improve performance when carrying out such activities as calculating customer balances.
- Without SIFT, the application and its add-ons would not be usable, because SIFT instantly allows you to see totals.
- Both SIFT and the version principle help ensure a low amount of C/AL code lines.
- You don’t need expensive hardware to set it up.
- You don’t need a dedicated employee to maintain it.
MICROSOFT SQL SERVER OPTION FOR MICROSOFT NAVISION
- Integrates Microsoft Navision with a wide variety of third-party products and applications, for example, other corporate reporting systems, human resources applications, and so on.
- OLAP capabilities allow you to draw upon table relations within Microsoft Navision enabling a multidimensional view of data.
- Automates regular administrative process, such as back up and restore procedures.
COMMERCE GATEWAY FUNCTIONALITY
- Send BizTalk Request for Purchase Quote
- Receive BizTalk Request for Sales Quote
- Send BizTalk Sales Quote
- Receive BizTalk Purchase Quote
- Send BizTalk Purchase Order
- Receive BizTalk Sales Order
- Send BizTalk Sales Order Confirmation
- Receive BizTalk Purchase Order Confirmation
- Send BizTalk Sales Invoice
- Receive BizTalk Purchase Invoice
- Send BizTalk Shipment Notification
- Receive BizTalk Purchase Receipt
- Send BizTalk Sales Credit Memo
- Receive BizTalk Purchase Credit Memo
- Export BizTalk Product Catalog
- Import BizTalk Product Catalog
- Setup of partner agreements
Note: Purchase quotes, purchase order confirmations, and purchase invoices are automatically compared to the related corresponding documents.
ROLE AND PERMISSION MANAGEMENT
- Role and Permission Management is the application area in Microsoft Navision from where roles are easily set up and managed. You create roles and add permissions in a graphical user interface, and it is as simple as using Microsoft Navision.
- Roles are flexible and can be customized to the exact requirements of any organization. All activities leverage the existing business logic in Microsoft Navision.
- Sales Management enables the entire sales process. Your customers can set up themselves via the Web portal and can maintain their contact information, such as shipping addresses and contact persons.
- With the advanced order-tracking feature, your customers will always know exactly where their order is in the order/sales cycle. Moreover, your customer can allocate an order to a blanket order that is set up in advance.
- Extended reordering grants the customer convenient access to previously made orders for easy reordering.
- Purchase Management Web enables the entire purchasing process. Vendors can maintain all the information about themselves that is stored in Microsoft Navision. This includes product information such as catalogs, item numbers, and prices. Furthermore, delivery dates can be maintained so that they are always up-to-date, ensuring optimal supply chain performance.
- Reverse auctions, which are set up and managed from within Microsoft Navision, allow vendors to bid on an order via the Web portal. This ensures that companies will always get the best possible price the market can offer.
- Moreover, vendors can drop-ship orders to customers and therefore eliminate supply chain inefficiencies.
- Commerce Portal has advanced notification features throughout the application.
- The system can be set up to send e-mail notifications when any given event occurs, for example, when a certain item becomes available, when an order is shipped, or when a reverse auction is opened.
- The placeholder makes it possible to automatically send personalized e-mails to partners containing business data from Microsoft Navision, for example, order numbers and balances.
- Commerce Portal comes with advanced Content Management functionality.
- All Web pages are managed from within Microsoft Navision. This means that a Microsoft Navision user can do all Web page maintenance without the assistance of Internet consultants.
- Import unlimited numbers of taxonomies from public authorities, credit institutions, banks, and so on
- View information attached to taxonomy
- Map taxonomy lines to any combination of general ledger accounts, using standard Microsoft Navision filters
- View and print out XBRL document file for appraisal before sending
- Export XBRL-document that can be sent as an e-mail
Financial statements are written reports that provide an indication of an individual’s, organization’s, or business’ financial status. There are four basic types of financial statements: balance sheets, income statements, cash-flow statements, and statements of retained earnings. Typically, financial statements are used in relation to business endeavors.
Financial accounting generates the following general-purpose, external, financial statements:
- Income statement (sometimes referred to as “results of operations” or “earnings statement” or “profit and loss [P&L] statement”, revenues minus expenses for a given time period ending at a specified date.)
- Balance sheet (sometimes referred to as statement of financial position at a given point in time.)
- Statement of cash flows (summarizes sources and uses of cash; indicates whether enough cash is available to carry on routine operations.)
- Statement of stockholders’ equity (also known as Statement of Retained Earnings or Equity Statement.)
Income Statement (Laporan Rugi Laba)
The income statement reports a company’s profitability during a specified period of time. The period of time could be one year, one month, three months, 13 weeks, or any other time interval chosen by the company.
The main components of the income statement are revenues, expenses, gains, and losses. Revenues include such things as sales, service revenues, and interest revenue. Expenses include the cost of goods sold, operating expenses (such as salaries, rent, utilities, advertising), and nonoperating expenses (such as interest expense). If a corporation’s stock is publicly traded, the earnings per share of its common stock are reported on the income statement.
Balance Sheet (Neraca)
The balance sheet is organized into three parts: (1) assets, (2) liabilities, and (3) stockholders’ equity at a specified date (typically, this date is the last day of an accounting period).
The first section of the balance sheet reports the company’s assets and includes such things as cash, accounts receivable, inventory, prepaid insurance, buildings, and equipment. The next section reports the company’s liabilities; these are obligations that are due at the date of the balance sheet and often include the word “payable” in their title (Notes Payable, Accounts Payable, Wages Payable, and Interest Payable). The final section is stockholders’ equity, defined as the difference between the amount of assets and the amount of liabilities.
Statement of Cash Flows (Laporan Arus Kas)
The statement of cash flows explains the change in a company’s cash (and cash equivalents) during the time interval indicated in the heading of the statement. The change is divided into three parts: (1) operating activities, (2) investing activities, and (3) financing activities.
The operating activities section explains how a company’s cash (and cash equivalents) have changed due to operations. Investing activities refer to amounts spent or received in transactions involving long-term assets. The financing activities section reports such things as cash received through the issuance of long-term debt, the issuance of stock, or money spent to retire long-term liabilities.
Statement of Stockholders’ Equity (Laporan Perubahan Modal)
The statement of stockholders’ (or shareholders’) equity lists the changes in stockholders’ equity for the same period as the income statement and the cash flow statement. The changes will include items such as net income, other comprehensive income, dividends, the repurchase of common stock, and the exercise of stock options.
Cost of goods sold (COGS) refer to the inventory costs of those goods a business has sold during a particular period. Costs are associated with particular goods using one of several formulas, including specific identification, first-in first-out (FIFO), or average cost. Costs include all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Costs of goods made by the business include material, labor, and allocated overhead. The costs of those goods not yet sold are deferred as costs of inventory until the inventory is sold or written down in value.
Cost of Goods Sold (COGS), also known as cost of sales, is the total direct expenses incurred in the production of a good, including the cost of materials used to make that good and the cost of labor to produce it. It does not include indirect expenses, like marketing, accounting, and shipping. It’s important for a business to know the COGS of its products, since this helps it determine accurately which products is turning a profit. By subtracting the COGS from the sales revenue, a business can determine the gross profit earned on particular goods. Net profit, in the same way, is the difference between COGS and indirect expenses from sales revenue.
The way these costs relate to profit can be seen in the following example. James owns a business that resells machines. At the start of 2009, he has no machines or parts on hand. He buys machines A and B for 10 each, and later buys machines C and D for 12 each. All the machines are the same, but they have serial numbers. James sells machines A and C for 20 each. His cost of goods sold depends on her inventory method. Under specific identification, the cost of goods sold is 10 + 12, the particular costs of machines A and C. If he uses FIFO, his costs are 20 (10+10). If he uses average cost, his costs are 22 ( (10+10+12+12)/4 x 2). If he uses LIFO, his costs are 24 (12+12). Thus, his profit for accounting and tax purposes may be 20, 18, or 16, depending on his inventory method. After the sales, his inventory values are either 20, 22 or 24.
After year end, James decides he can make more money by improving machines B and D. He buys and uses 10 of parts and supplies, and it takes 6 hours at 2 per hour to make the improvements to each machine. James has overhead, including rent and electricity. He calculates that the overhead adds 0.5 per hour to his costs. Thus, James has spent 20 to improve each machine (10/2 + 12 + (6 x 0.5) ). He sells machine D for 45. His cost for that machine depends on his inventory method. If he used FIFO, the cost of machine D is 12 plus 20 he spent improving it, for a profit of 13. Remember, he used up the two 10 cost items already under FIFO. If he uses average cost, it is 11 plus 20, for a profit of 14. If he used LIFO, the cost would be 10 plus 20 for a profit of 15.
In year 3, James sells the last machine for 38 and quits the business. He recovers the last of her costs. His total profits for the three years are the same under all inventory methods. Only the timing of income and the balance of inventory differ. Here is a comparison under FIFO, Average Cost, and LIFO:
|Transaction No.||year of||Machine Name||Cost||Profit|
|Cost of Goods Sold||—— Profit ——|
Cost Flow Assumptions/Inventory Identification Conventions
The following methods are available in many jurisdictions for associating costs with goods sold and goods still on hand:
- Average cost. The average cost method relies on average unit cost to calculate cost of units sold and ending inventory. Several variations on the calculation may be used, including weighted average and moving average.
- First-In First-Out (FIFO) assumes that the items purchased or produced first are sold first. Costs of inventory per unit or item are determined at the time made or acquired. The oldest cost (i.e., the first in) is then matched against revenue and assigned to cost of goods sold.
- Last-In First-Out (LIFO) is the reverse of FIFO. Some systems permit determining the costs of goods at the time acquired or made, but assigning costs to goods sold under the assumption that the goods made or acquired last are sold first. Costs of specific goods acquired or made are added to a pool of costs for the type of goods. Under this system, the business may maintain costs under FIFO but track an offset in the form of a LIFO reserve. Such reserve (an asset or contra-asset) represents the difference in cost of inventory under the FIFO and LIFO assumptions. Such amount may be different for financial reporting and tax purposes in the United States.
Each of the three cost flow assumptions listed above can be used in either of two systems (or methods) of inventory:
A. Periodic inventory system. Under this system the amount appearing in the Inventory account is not updated when purchases of merchandise are made from suppliers. Rather, the Inventory account is commonly updated or adjusted only once—at the end of the year. During the year the Inventory account will likely show only the cost of inventory at the end of the previous year.
Under the periodic inventory system, purchases of merchandise are recorded in one or more Purchases accounts. At the end of the year the Purchases account(s) are closed and the Inventory account is adjusted to equal the cost of the merchandise actually on hand at the end of the year. Under the periodic system there is no Cost of Goods Sold account to be updated when a sale of merchandise occurs.
In short, under the periodic inventory system there is no way to tell from the general ledger accounts the amount of inventory or the cost of goods sold.
B. Perpetual inventory system. Under this system the Inventory account is continuously updated. The Inventory account is increased with the cost of merchandise purchased from suppliers and it is reduced by the cost of merchandise that has been sold to customers. (The Purchases account(s) do not exist.)
Under the perpetual system there is a Cost of Goods Sold account that is debited at the time of each sale for the cost of the merchandise that was sold. Under the perpetual system a sale of merchandise will result in two journal entries: one to record the sale and the cash or accounts receivable, and one to reduce inventory and to increase cost of goods sold.
The combination of the three cost flow assumptions and the two inventory systems results in six available options when accounting for the cost of inventory and calculating the cost of goods sold:
A1. Periodic FIFO
A2. Periodic LIFO
A3. Periodic Average
B1. Perpetual FIFO
B2. Perpetual LIFO
B3. Perpetual Average
A1. Periodic FIFO
“Periodic” means that the Inventory account is not routinely updated during the accounting period. Instead, the cost of merchandise purchased from suppliers is debited to an account called Purchases. At the end of the accounting year the Inventory account is adjusted to equal the cost of the merchandise that has not been sold. The cost of goods sold that will be reported on the income statement will be computed by taking the cost of the goods purchased and subtracting the increase in inventory (or adding the decrease in inventory).
“FIFO” is an acronym for First In, First Out. Under the FIFO cost flow assumption, the first (oldest) costs are the first ones to leave inventory and become the cost of goods sold on the income statement. The last (or recent) costs will be reported as inventory on the balance sheet.
Let’s illustrate periodic FIFO with the amounts from the Bookstore:
As before, we need to account for the total goods available for sale (5 books at a cost of $440). Under FIFO we assign the first cost of $85 to the one book that was sold. The remaining $355 ($440 – $85) is assigned to inventory. The $355 of inventory costs consists of $87 + $89 + $89 + $90. The $85 cost assigned to the book sold is permanently gone from inventory.
If the Bookstore sells the textbook for $110, its gross profit under periodic FIFO will be $25 ($110 – $85). If the costs of textbooks continue to increase, FIFO will always result in more profit than other cost flows, because the first cost is always lower.
A2. Periodic LIFO
“Periodic” means that the Inventory account is not updated during the accounting period. Instead, the cost of merchandise purchased from suppliers is debited to an account called Purchases. At the end of the accounting year the Inventory account is adjusted to equal the cost of the merchandise that is unsold. The other costs of goods will be reported on the income statement as the cost of goods sold.
“LIFO” is an acronym for Last In, First Out. Under the LIFO cost flow assumption, the last (or recent) costs are the first ones to leave inventory and become the cost of goods sold on the income statement. The first (or oldest) costs will be reported as inventory on the balance sheet.
It’s important to note that under LIFO periodic (not LIFO perpetual) we wait until the entire year is over before assigning the costs. Then we flow the year’s last costs first, even if those goods arrived after the last sale of the year. For example, assume the last sale of the year at the Bookstore occurred on December 27. Also assume that the store’s last purchase of the year arrived on December 31. Under LIFO periodic, the cost of the book purchased on December 31 is sent to the cost of goods sold first, even though it’s physically impossible for that book to be the one sold on December 27. (This reinforces our previous statement that the flow of costs does not have to correspond with the physical flow of units.)
Let’s illustrate periodic LIFO by using the data for the Bookstore:
As before we need to account for the total goods available for sale: 5 books at a cost of $440. Under periodic LIFO we assign the last cost of $90 to the one book that was sold. (If two books were sold, $90 would be assigned to the first book and $89 to the second book.) The remaining $350 ($440 – $90) is assigned to inventory. The $350 of inventory cost consists of $85 + $87 + $89 + $89. The $90 assigned to the book that was sold is permanently gone from inventory.
If the bookstore sold the textbook for $110, its gross profit under periodic LIFO will be $20 ($110 – $90). If the costs of textbooks continue to increase, LIFO will always result in the least amount of profit. (The reason is that the last costs will always be higher than the first costs. Higher costs result in less profits and usually lower income taxes.)
A3. Periodic Average
Under “periodic” the Inventory account is not updated and purchases of merchandise are recorded in an account called Purchases. Under this cost flow assumption an average cost is calculated using the total goods available for sale (cost from the beginning inventory plus the costs of all subsequent purchases made during the entire year). In other words, the periodic average cost is calculated after the year is over—after all the puchases of the year have occurred. This average cost is then applied to the units sold during the year as well as to the units in inventory at the end of the year.
As you can see, our facts remain the same—there are 5 books available for sale for the year 2010 and the cost of the goods available is $440. The weighted average cost of the books is $88 ($440 of cost of goods available ÷ 5 books available) and it is used for both the cost of goods sold and for the cost of the books in inventory.
Since the bookstore sold only one book, the cost of goods sold is $88 (1 x $88). The four books still on hand are reported at $352 (4 x $88) of cost in the Inventory account. The total of the cost of goods sold plus the cost of the inventory should equal the total cost of goods available ($88 + $352 = $440).
If Bookstore sells the textbook for $110, its gross profit under the periodic average method will be $22 ($110 – $88). This gross profit is between the $25 computed under periodic FIFO and the $20 computed under periodic LIFO.
B1. Perpetual FIFO
Under the perpetual system the Inventory account is constantly (or perpetually) changing. When a retailer purchases merchandise, the retailer debits its Inventory account for the cost; when the retailer sells the merchandise to its customers its Inventory account is credited and its Cost of Goods Sold account is debited for the cost of the goods sold. Rather than staying dormant as it does with the periodic method, the Inventory account balance is continuously updated.
Under the perpetual system, two transactions are recorded when merchandise is sold: (1) the sales amount is debited to Accounts Receivable or Cash and is credited to Sales, and (2) the cost of the merchandise sold is debited to Cost of Goods Sold and is credited to Inventory. (Note: Under the periodic system the second entry is not made.)
With perpetual FIFO, the first (or oldest) costs are the first moved from the Inventory account and debited to the Cost of Goods Sold account. The end result under perpetual FIFO is the same as under periodic FIFO. In other words, the first costs are the same whether you move the cost out of inventory with each sale (perpetual) or whether you wait until the year is over (periodic).
B2. Perpetual LIFO
Under the perpetual system the Inventory account is constantly (or perpetually) changing. When a retailer purchases merchandise, the retailer debits its Inventory account for the cost of the merchandise. When the retailer sells the merchandise to its customers, the retailer credits its Inventory account for the cost of the goods that were sold and debits its Cost of Goods Sold account for their cost. Rather than staying dormant as it does with the periodic method, the Inventory account balance is continuously updated.
Under the perpetual system, two transactions are recorded at the time that the merchandise is sold: (1) the sales amount is debited to Accounts Receivable or Cash and is credited to Sales, and (2) the cost of the merchandise sold is debited to Cost of Goods Sold and is credited to Inventory. (Note: Under the periodic system the second entry is not made.)
With perpetual LIFO, the last costs available at the time of the sale are the first to be removed from the Inventory account and debited to the Cost of Goods Sold account. Since this is the perpetual system we cannot wait until the end of the year to determine the last cost—an entry must be recorded at the time of the sale in order to reduce the Inventory account and to increase the Cost of Goods Sold account.
If costs continue to rise throughout the entire year, perpetual LIFO will yield a lower cost of goods sold and a higher net income than periodic LIFO. Generally this means that periodic LIFO will result in less income taxes than perpetual LIFO. (If you wish to minimize the amount paid in income taxes during periods of inflation, you should discuss LIFO with your tax adviser.)
Once again we’ll use our example for the Bookstore:
Let’s assume that after the Bookstore makes its second purchase in June 2010, the Bookstore sells one book. This means the last cost at the time of the sale was $89. Under perpetual LIFO the following entry must be made at the time of the sale: $89 will be credited to Inventory and $89 will be debited to Cost of Goods Sold. If that was the only book sold during the year, at the end of the year the Cost of Goods Sold account will have a balance of $89 and the cost in the Inventory account will be $351 ($85 + $87 + $89 + $90).
If the bookstore sells the textbook for $110, its gross profit under perpetual LIFO will be $21 ($110 – $89). Note that this is different than the gross profit of $20 under periodic LIFO.
B3. Perpetual Average
Under the perpetual system the Inventory account is constantly (or perpetually) changing. When a retailer purchases merchandise, the costs are debited to its Inventory account; when the retailer sells the merchandise to its customers the Inventory account is credited and the Cost of Goods Sold account is debited for the cost of the goods sold. Rather than staying dormant as it does with the periodic method, the Inventory account balance under the perpetual average is changing whenever a purchase or sale occurs.
Under the perpetual system, two sets of entries are made whenever merchandise is sold: (1) the sales amount is debited to Accounts Receivable or Cash and is credited to Sales, and (2) the cost of the merchandise sold is debited to Cost of Goods Sold and is credited to Inventory. (Note: Under the periodic system the second entry is not made.)
Under the perpetual system, “average” means the average cost of the items in inventory as of the date of the sale. This average cost is multiplied by the number of units sold and is removed from the Inventory account and debited to the Cost of Goods Sold account. We use the average as of the time of the sale because this is a perpetual method. (Note: Under the periodic system we wait until the year is over before computing the average cost.)
Let’s use the same example again for the Bookstore:
Let’s assume that after The Bookstore makes its second purchase, The Bookstore sells one book. This means the average cost at the time of the sale was $87.50 ([$85 + $87 + $89 + $89] ÷ 4]). Because this is a perpetual average, a journal entry must be made at the time of the sale for $87.50. The $87.50 (the average cost at the time of the sale) is credited to Inventory and is debited to Cost of Goods Sold. After the sale of one unit, three units remain in inventory and the balance in the Inventory account will be $262.50 (3 books at an average cost of $87.50).
After The Bookstore makes its third purchase, the average cost per unit will change to $88.125 ([$262.50 + $90] ÷ 4). As you can see, the average cost moved from $87.50 to $88.125—this is why the perpetual average method is sometimes referred to as the moving average method. The Inventory balance is $352.50 (4 books with an average cost of $88.125 each).
Comparison of Cost Flow Assumptions
Below is a recap of the varying amounts for the cost of goods sold, gross profit, and ending inventory that were calculated above.
|Cost of Goods Sold||– 85||– 90||– 88||– 85||– 89||– 87.50|
|Gross Profit||$ 25||$ 20||$ 22||$ 25||$ 21||$ 22.50|
There are two methods for estimating ending inventory:
1. Gross Profit Method
2. Retail Method
1. Gross Profit Method. The gross profit method for estimating inventory uses the information contained in the top portion of a merchandiser’s multiple-step income statement:
Income Statement (partial)
For the Year Ended Dec. 31, 2009
|Cost of Goods Sold|
|Beginning Inventory||$ 22,000|
|Purchases – net||83,000|
|Cost of Goods Available||105,000|
|Less: Ending Inventory||25,000|
|Cost of Goods Sold||80,000||80.0%|
|Gross Profit||$ 20,000||20.0%|
Let’s assume that we need to estimate the cost of inventory on hand on June 30, 2010. From the 2009 income statement shown above we can see that the company’s gross profit is 20% of the sales and that the cost of goods sold is 80% of the sales. If those percentages are reasonable for the current year, we can use those percentages to help us estimate the cost of the inventory on hand as of June 30, 2010.
While an algebraic equation could be constructed to determine the estimated amount of ending inventory, we prefer to simply use the income statement format. We prepare a partial income statement for the period beginning after the date when inventory was last physically counted, and ending with the date for which we need the estimated inventory cost. In this case, the income statement will go from January 1, 2010 until June 30, 2010.
Some of the numbers that we need are easily obtained from sales records, customers, suppliers, earlier financial statements, etc. For example, sales for the first half of the year 2010 are taken from the company’s records. The beginning inventory amount is the ending inventory reported on the December 31, 2009 balance sheet. The purchases information for the first half of 2010 is available from the company’s records or its suppliers. The amounts that we have available are written in italics in the following partial income statement:
Income Statement (partial)
For the Six Months Ended June 30, 2010
We will fill in the rest of the statement with the answers to the following calculations. The amounts in italics come from the statement above. The bold amount is the answer or result of the calculation.
|Step 1.||Cost of Goods Available||=||Beginning Inventory||+||Net Purchases|
|Cost of Goods Available||=||$25,000||+||$46,000|
|Cost of Goods Available||=||$71,000|
|Step 2.||Gross Profit||=||Gross Profit Percentage (or Gross Margin)||x||Sales|
|Step 3.||Cost of Goods Sold||=||Sales||–||Gross Profit|
|Cost of Goods Sold||=||$56,000||–||$11,200 (from Step 2.)|
|Cost of Goods Sold||=||$44,800|
This can also be calculated as 80% x Sales of $56,000 = $44,800.
Inserting this information into the income statement yields the following:
Income Statement (partial)
For the Six Months Ended June 30, 2010
As you can see, the ending inventory amount is not yet shown. We compute this amount by subtracting cost of goods sold from the cost of goods available:
Ending Inventory = Cost of Goods Available – Cost of Goods Sold Ending Inventory = $71,000 – $44,800 Ending Inventory = $26,200
Below is the completed partial income statement with the estimated amount of ending inventory at $26,200. (Note: It is always a good idea to recheck the math on the income statement to be certain you computed the amounts correctly.)
Income Statement (partial)
For the Six Months Ended June 30, 2010
2. Retail Method. The retail method can be used by retailers who have their merchandise records in both cost and retail selling prices. A very simple illustration for using the retail method to estimate inventory is shown here:
As you can see, the cost amounts are arranged into one column. The retail amounts are listed in a separate column. The Goods Available amounts are used to compute the cost-to-retail ratio. In this case the cost of goods available of $80,000 is divided by the retail amount of goods available ($100,000). This results in a cost-to-retail ratio, or cost ratio, of 80%.
To arrive at the estimated ending inventory at cost, we multiply the estimated ending inventory at retail ($10,000) times the cost ratio of 80% to arrive at $8,000.
An issue tracking system (also ITS, trouble ticket system, support ticket or incident ticket system) is a computer software package that manages and maintains lists of issues, as needed by an organization. Issue tracking systems are commonly used in an organization’s customer support call center to create, update, and resolve reported customer issues, or even issues reported by that organization’s other employees. An issue tracking system often also contains a knowledge base containing information on each customer, resolutions to common problems, and other such data. An issue tracking system is similar to a “bugtracker”, and often, a software company will sell both, and some bugtrackers are capable of being used as an issue tracking system, and vice versa.
The end-user of the issue tracking system can create entirely new issues, read existing issues, add details to existing issues, or resolve an issue. When a user of the system makes a change, the issue tracking system will record the action and who made it, so as to maintain a history of the actions taken. Each user of the system may have issues assigned to them, that is, that user is responsible for the proper resolution of that issue. This is generally presented to the user in a list format. The user may have the option of re-assigning an issue to another user, if needed. For security, an issue tracking system will authenticate its users before allowing access to the systems.
Issues can have several aspects to them. Each issue in the system may have an urgency value assigned to it, based on the overall importance of that issue. Critical issues are the most severe that should be resolved in the most expedient way possible, taking precedence over all other issues. Low or zero urgency issues are minor, and should be resolved as time permits. Other details of issues include the customer experiencing the issue (whether external or internal), date of submission, detailed descriptions of the problem being experienced, attempted solutions or work-arounds, and other relevant information. As previously noted, each issue maintains a history of each change.
An example scenario is presented to demonstrate how a common issue tracking system would work:
- A customer service technician receives a telephone call, email, or other communication from a customer about a problem. Some applications provide automatic error reporting from exception handling blocks.
- The technician verifies that the problem is real, and not just perceived. The technician will also ensure that enough information about the problem is obtained from the customer. This information generally includes the environment of the customer, when and how the issue occurs, and all other relevant circumstances.
- The technician creates the issue in the system, entering all relevant data, as provided by the customer.
- As work is done on that issue, the system is updated with new data by the technician. Any attempt at fixing the problem should be noted in the issue system.
- After the issue has been fully addressed, it is marked as resolved in the issue tracking system.
The problem may not have been fully corrected, yet it will still be marked as resolved.
The Comparison List of Issue Tracking Systems:
Address Resolution Protocol (ARP) is a telecommunications protocol used for resolution of network layer addresses into link layer addresses, a critical function in multiple-access networks.
ARP has been implemented in many combinations of network and overlaying internetwork technologies, such as IPv4, Chaosnet, DECnet and Xerox PARC Universal Packet (PUP) using IEEE 802 standards, FDDI, X.25, Frame Relay and Asynchronous Transfer Mode (ATM), IPv4 over IEEE 802.3 and IEEE 802.11 being the most common cases.In Internet Protocol Version 6 (IPv6) networks, the functionality of ARP is provided by the Neighbor Discovery Protocol (NDP).
An ARP – Address Resolution Protocol is used to translate an IP address into MAC address. There are two type of ARP messages – ARP request that is broadcast to all the systems in a LAN segment and the ARP reply that is unicast to the requesting station alone. ARP messages contain source and destination IP addresses & MAC addresses (if available), among other information.
The Address Resolution Protocol is used within a single LAN segment and cannot be routed across a different network. An Gratuitous ARP message is broadcast to all the systems of a LAN segment when a system is just starting up or when the IP address/ MAC address of system has changed. This enables the computers in a LAN to update their ARP cache tables appropriately. This message does not solicit a response. In IPv6, there is a protocol called Neighbor Discovery Protocol (NDP) that does the same function as the ARP in IPv4.
The process behind one computer (C1) wants to communicate with another computer (C2) in a LAN segment:
When it comes to the Layer 2 communications between networked systems, IP address is not used. So, within a LAN segment computers identify each other and communicate with each other using the MAC Address. So, when Computer (C1) gets the target IP address of the Computer (C2) it wants to communicate with,
- It first looks at its own ARP cache (which is a table that contains the IP addresses and their corresponding MAC addresses for computers/ systems within a network) to see if it already has the MAC address for the computer (C2), it wants to communicate with.
- If the MAC address of C2 is present in its ARP cache table, it can then append the message with the corresponding MAC address and send it over the network (cable, switch).
- If the MAC address of C2 is not present in its ARP cache table, C1 will broadcast an ARP request message to all the computers / systems in the network indicating that it wants the MAC address for the IP address in its possession.
- This ARP request is received by all the systems in the network, but only the computer with the target IP address (C2) responds to C1 with an ARP reply message, indicating its MAC address.
- Now since C1 has both IP address and MAC address of C2, it will communicate with C2 using this information. In the process, both C1 and C2 update their ARP cache tables with the newly acquired information so that the next time the ARP broadcast message can be avoided.
ARP Cache/Cache Table
Since computers cannot send broadcast messages every time they need to connect with another network device, they store the IP addresses and the corresponding MAC addresses of systems they frequently communicate with, in a table called ARP Cache table. All the systems in the LAN maintain this table. The entries in the ARP cache table are generally short lived and are updated every 15-20 minutes.
Since a LAN segment consists of a number of computing devices, some individual ARP table entries are removed if the system doesn’t communicate with certain devices for considerable amount of time. This is done mainly to limit the size of ARP cache.
MAC and IP addresses are both key components to network, but they serve different purposes, and are visible in very different ways.
A MAC (or Machine Access Control) address is best thought of as a unique serial number assigned to every network interface on every device. And by unique, I do mean unique; no two network cards anywhere should have the same MAC address.
MAC addresses are 6-byte (48-bits) in length, and are written in MM:MM:MM:SS:SS:SS format. The first 3-bytes are ID number of the manufacturer, which is assigned by an Internet standards body. The second 3-bytes are serial number assigned by the manufacturer.
Operating Systems support various command-line and GUI utilities to allow users to find MAC address of the system. On Unix variants including Solaris and Linux support “ifconfig -a”, “ip link list” or “ip address show” command that displays MAC address of the network device among other useful information. You can see your network interfaces MAC addresses using the command prompt in Windows including NT, 2000, XP and 2003 support “ipconfig /all” command that displays MAC address. On a MacOS, one can find MAC address by opening “System Preferences”, then selecting “Network”.
For example the result using command prompt in windows:
Ethernet adapter Local Area Connection 2:
Physical Address. . . . . . . . . : 00-22-FA-5A-B4-C2
An IP address is assigned to every device on a network so that device can be located on the network. The internet is just a network after all, and every device connected to it has an IP address so that it can be located. For example, The IP address is at 172.16.254.1. That number is used by the network routing equipment so that when you ask for a page from the site, that request is routed to the right server.
The computers or equipment you have connected to the internet are also assigned IP addresses. If you’re directly connected, your computer will have an IP address that can be reached from anywhere on the internet. If you’re behind a router, that router will have that internet-visible IP address, but it will then set up a private network that your computer is connected to, assigning IP addresses out of a private range that is not directly visible on the internet. All internet traffic must go through the router, and will appear on the internet to have come from that router.
The following is an illustration or metaphors of between IP and MAC address:
An IP Address is kind of like your postal address. Anyone who knows your postal address can send you a letter. That letter may travel a simple or complex route to get to you, but you don’t care as long as it makes it.
The same is true of packets of data traveling on a network like the internet. The IP address indicates where a packet is destined, and the system takes care of getting it there. A letter may or may not also have a return address so you know who to write back to – a TCP/IP address always has a return IP address.
A MAC Address is kind of like the color, size and shape of your physical mail box. It’s enough that the postal carrier (your network router) can identify it, but it’s unique to you, there’s no reason that anyone other than your postal carrier might care what it is, and you can change it by getting a new mailbox (network card) at any time and slapping your name (IP address) on it without affecting your delivery.
As Summary the difference between MAC and IP Address:
1. MAC address is supposedly unique to each network interface card while an IP address is usually replaced
2. An IP address reveals which element on which network it is while the same cannot be extracted from a MAC address
3. MAC is one of the security methods in WiFi
4. Both IP and MAC addresses can still be spoofed or copied
source: ask-leo! by Notenboom
IEEE 802.11 is a set of standards for implementing wireless local area network (WLAN) computer communication in the 2.4, 3.6 and 5 GHz frequency bands. They are created and maintained by the IEEE LAN/MAN Standards Committee (IEEE 802). The base version of the standard IEEE 802.11-2007 has had subsequent amendments. These standards provide the basis for wireless network products using the Wi-Fi brand.The 802.11 family consists of a series of over-the-air modulation techniques that use the same basic protocol. The most popular are those defined by the 802.11b and 802.11g protocols, which are amendments to the original standard.
802.11 and 802.11x refers to a family of specifications developed by the IEEE for wireless LAN (WLAN) technology. 802.11 specifies an over-the-air interface between a wireless client and a base station or between two wireless clients. 802.11 technology has its origins in a 1985 ruling by the U.S. Federal Communications Commission that released the ISM band for unlicensed use.Vic Hayes, who held the chair of IEEE 802.11 for 10 years and has been called the “father of Wi-Fi” was involved in designing the initial 802.11b and 802.11a standards within the IEEE.
There are several specifications in the 802.11 family:
- 802.11 — applies to wireless LANs and provides 1 or 2 Mbps transmission in the 2.4 GHz band using either frequency hopping spread spectrum (FHSS) or direct sequence spread spectrum (DSSS).
- 802.11a — an extension to 802.11 that applies to wireless LANs and provides up to 54-Mbps in the 5GHz band. 802.11a uses an orthogonal frequency division multiplexing encoding scheme rather than FHSS or DSSS.
- 802.11b (also referred to as 802.11 High Rate or Wi-Fi) — an extension to 802.11 that applies to wireless LANS and provides 11 Mbps transmission (with a fallback to 5.5, 2 and 1-Mbps) in the 2.4 GHz band. 802.11b uses only DSSS. 802.11b was a 1999 ratification to the original 802.11 standard, allowing wireless functionality comparable to Ethernet.
- 802.11e — a wireless draft standard that defines the Quality of Service (QoS) support for LANs, and is an enhancement to the 802.11a and 802.11b wireless LAN (WLAN) specifications. 802.11e adds QoS features and multimedia support to the existing IEEE 802.11b and IEEE 802.11a wireless standards, while maintaining full backward compatibility with these standards.
- 802.11g — applies to wireless LANs and is used for transmission over short distances at up to 54-Mbps in the 2.4 GHz bands.
- 802.11n — 802.11n builds upon previous 802.11 standards by adding multiple-input multiple-output (MIMO). The additional transmitter and receiver antennas allow for increased data throughput through spatial multiplexing and increased range by exploiting the spatial diversity through coding schemes like Alamouti coding. The real speed would be 100 Mbit/s (even 250 Mbit/s in PHY level), and so up to 4-5 times faster than 802.11g.
- 802.11r – 802.11r, also called Fast Basic Service Set (BSS) Transition, supports VoWi-Fi handoff between access points to enable VoIP roaming on a Wi-Fi network with 802.1X authentication.
- 802.1X — Not to be confused with 802.11x (which is the term used to describe the family of 802.11 standards) 802.1X is an IEEE standard for port-based Network Access Control that allows network administrators to restricted use of IEEE 802 LAN service access points to secure communication between authenticated and authorized devices.
|802.11 network standards|
|Data rate per stream
|Modulation||Approximate indoor range||Approximate outdoor range|
|—||Jun 1997||2.4||20||1, 2||1||DSSS, FHSS||20||66||100||330|
|a||Sep 1999||5||20||6, 9, 12, 18, 24, 36, 48, 54||1||OFDM||35||115||120||390|
|b||Sep 1999||2.4||20||5.5, 11||1||DSSS||35||115||140||460|
|g||Jun 2003||2.4||20||6, 9, 12, 18, 24, 36, 48, 54||1||OFDM, DSSS||38||125||140||460|
|n||Oct 2009||2.4/5||20||7.2, 14.4, 21.7, 28.9, 43.3, 57.8, 65, 72.2[B]||4||OFDM||70||230||250||820|
|40||15, 30, 45, 60, 90, 120, 135, 150[B]||70||230||250||820|
|ac (DRAFT)||Nov. 2011||5||80||433, 867||8|
|160||867, 1.73 Gbit/s, 3.47 Gbit/s, 6.93 Gbit/s|
Current 802.11 standards define “frame” types for use in transmission of data as well as management and control of wireless links.
Frames are divided into very specific and standardized sections. Each frame consists of a MAC header, payload and frame check sequence (FCS). Some frames may not have the payload. The first two bytes of the MAC header form a frame control field specifying the form and function of the frame. The frame control field is further subdivided into the following sub-fields:
- Protocol Version: two bits representing the protocol version. Currently used protocol version is zero. Other values are reserved for future use.
- Type: two bits identifying the type of WLAN frame. Control, Data and Management are various frame types defined in IEEE 802.11.
- Sub Type: Four bits providing addition discrimination between frames. Type and Sub type together to identify the exact frame.
- ToDS and FromDS: Each is one bit in size. They indicate whether a data frame is headed for a distribution system. Control and management frames set these values to zero. All the data frames will have one of these bits set. However communication within an IBSS network always set these bits to zero.
- More Fragments: The More Fragments bit is set when a packet is divided into multiple frames for transmission. Every frame except the last frame of a packet will have this bit set.
- Retry: Sometimes frames require retransmission, and for this there is a Retry bit which is set to one when a frame is resent. This aids in the elimination of duplicate frames.
- Power Management: This bit indicates the power management state of the sender after the completion of a frame exchange. Access points are required to manage the connection and will never set the power saver bit.
- More Data: The More Data bit is used to buffer frames received in a distributed system. The access point uses this bit to facilitate stations in power saver mode. It indicates that at least one frame is available and addresses all stations connected.
- WEP: The WEP bit is modified after processing a frame. It is toggled to one after a frame has been decrypted or if no encryption is set it will have already been one.
- Order: This bit is only set when the “strict ordering” delivery method is employed. Frames and fragments are not always sent in order as it causes a transmission performance penalty.
Ethernet is a family of computer networking technologies for local area networks (LANs) commercially introduced in 1980. Standardized in IEEE 802.3, Ethernet has largely replaced competing wired LAN technologies. IEEE 802.3 is a working group and a collection of IEEE standards produced by the working group defining the physical layer and data link layer’s media access control (MAC) of wired Ethernet.
IEEE 802.3 Frame Format
IEEE 802.3 is a format frame which is the result of a merger of the specification IEEE 802.2 and IEEE 802.3, and consists of a header and a trailer IEEE of 802.3 and an IEEE 802.2 header.
Structure of data
An IEEE 802.3 frame consists of several fields as follows:
IEEE 802.3 header:
- Start Delimiter
- Destination Address
- Source Address
Header IEEE 802.2 Logical Link Control :
- Destination Service Access Point (DSAP)
- Source Service Access Point (SSAP)
IEEE 802.3 Trailer:
- Frame Check Sequence (FCS)
A data packet on the wire is called a frame. A frame begins with preamble and start frame delimiter, followed by an Ethernet header featuring source and destination MAC addresses. The middle section of the frame consists of payload data including any headers for other protocols (e.g., Internet Protocol) carried in the frame. The frame ends with a 32-bit cyclic redundancy check, which is used to detect corruption of data in transit.
Varieties of Ethernet
The Ethernet physical layer evolved over a considerable time span and encompasses quite a few physical media interfaces and several magnitudes of speed. The most common forms used are 10BASE-T, 100BASE-TX, and 1000BASE-T. All three utilize twisted pair cables and 8P8C modular connectors. They run at 10 Mbit/s, 100 Mbit/s, and 1 Gbit/s, respectively. Fiber optic variants of Ethernet offer high performance, electrical isolation and distance (tens of kilometers with some versions). In general, network protocol stack software will work similarly on all varieties.
Ethernet protocols refer to the family of local-area network (LAN) covered by the IEEE 802.3. In the Ethernet standard, there are two modes of operation: half-duplex and full-duplex modes. In the half duplex mode, data are transmitted using the popular Carrier-Sense Multiple Access/Collision Detection (CSMA/CD) protocol on a shared medium. The main disadvantages of the half-duplex are the efficiency and distance limitation, in which the link distance is limited by the minimum MAC frame size. This restriction reduces the efficiency drastically for high-rate transmission. Therefore, the carrier extension technique is used to ensure the minimum frame size of 512 bytes in Gigabit Ethernet to achieve a reasonable link distance.
Four data rates are currently defined for operation over optical fiber and twisted-pair cables:
- 10 Mbps – 10Base-T Ethernet (IEEE 802.3)
- 100 Mbps – Fast Ethernet (IEEE 802.3u)
- 1000 Mbps – Gigabit Ethernet (IEEE 802.3z)
- 10-Gigabit – 10 Gbps Ethernet (IEEE 802.3ae).
As with all IEEE 802 protocols, the ISO data link layer is divided into two IEEE 802 sublayers, the Media Access Control (MAC) sublayer and the MAC-client sublayer. The IEEE 802.3 physical layer corresponds to the ISO physical layer.
The MAC sub-layer has two primary responsibilities:
- Data encapsulation, including frame assembly before transmission, and frame parsing/error detection during and after reception
- Media access control, including initiation of frame transmission and recovery from transmission failure
The MAC-client sub-layer may be one of the following:
- Logical Link Control (LLC), which provides the interface between the Ethernet MAC and the upper layers in the protocol stack of the end station. The LLC sublayer is defined by IEEE 802.2 standards.
- Bridge entity, which provides LAN-to-LAN interfaces between LANs that use the same protocol (for example, Ethernet to Ethernet) and also between different protocols (for example, Ethernet to Token Ring). Bridge entities are defined by IEEE 802.1 standards.
Protocol Structure – Ethernet: IEEE 802.3 Local Area Network protocolsThe basic IEEE 802.3 Ethernet MAC Data Frame for 10/100Mbps Ethernet:
|Pre||SFD||DA||SA||Length Type||Data unit + pad||FCS|
- Preamble (PRE)– 7 bytes. The PRE is an alternating pattern of ones and zeros that tells receiving stations that a frame is coming, and that provides a means to synchronize the frame-reception portions of receiving physical layers with the incoming bit stream.
- Start-of-frame delimiter (SFD)– 1 byte. The SOF is an alternating pattern of ones and zeros, ending with two consecutive 1-bits indicating that the next bit is the left-most bit in the left-most byte of the destination address.
- Destination address (DA)– 6 bytes. The DA field identifies which station(s) should receive the frame..
- Source addresses (SA)– 6 bytes. The SA field identifies the sending station.
- Length/Type– 2 bytes. This field indicates either the number of MAC-client data bytes that are contained in the data field of the frame, or the frame type ID if the frame is assembled using an optional format.
- Data– Is a sequence of n bytes (46=< n =<1500) of any value. (The total frame minimum is 64bytes.)
- Frame check sequence (FCS)– 4 bytes. This sequence contains a 32-bit cyclic redundancy check (CRC) value, which is created by the sending MAC and is recalculated by the receiving MAC to check for damaged frames.
MAC Frame with Gigabit Ethernet Carrier Extension (IEEE 803.3z)
1000Base-X has a minimum frame size of 416bytes, and 1000Base-T has a minimum frame size of 520bytes. The Extension is a non-data variable extension field to frames that are shorter than the minimum length.
|Pre||SFD||DA||SA||Length Type||Data unit + pad||FCS||Ext|
source: global networking sites