When I complement 1 (~1), I get the output as -2. How is this done internally?
I first assumed that the bits are inverted, so 0001 becomes 1110 and then 1 is added to it, so it becomes 1111 which is stored, how is the number then retrieved?
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Well, no. When you complement 1, you go just invert the bits:
And that’s -2 in two’s complement, which is the way your computer internally represents negative numbers. See http://en.wikipedia.org/wiki/Two's_complement but here are some examples: