The diagram illustrates the flow of data within a computer. Data is input, processed and then either output or sent to storage. Data moves around the computer system using the system bus. 

A bus is a parallel transmission component with each separate wire carrying a single bit. It is important not to describe a bus as a storage device as it does not store data but simply transfers data from one component to another.

Address bus carries an address, this can be to the memory controller to identify a location in memory which is to be read from or written to. Or it can be the I/O system to identify the source or destination of the data.

Data bus carries data from the processor to the memory or to an output device or can carry data from the memory or from an input device.

Control bus carries data from the control unit to any system component or transmits a signal to the control unit. The major use of the control bus is to carry the timing signals

Fetch : 

 Instructions are loaded into memory (RAM) before the processor starts running the program. Each instruction is then fetched from memory in order and put into the appropriate registers. The control unit can then access the instruction for the next stages.

Decode : 

The binary representation of an instruction needs to be decoded before it can be run. This is the process the control unit uses to work out what the other components need to do. 

Each processor will have slightly different encodings for instructions.

Execute : 

Once the instruction is understood, the instruction will be executed. 

The control unit will tell the other components what they need to do in order for the instruction to work.