Usually it is called cold junction compensation. The purpose is to compensate for the thermocouple action at each junction of dissimilar metals.
Each connection of dissimilar metals adds another thermocouple to the circuit. The compensation corrects for those undesired thermocouples and allows the reading or calculation of the corrected reading depending upon how the compensation is done.
See this: http://www.maxim-ic.com/appnotes.cfm/an_pk/4026 for an expanded explanation of electronic compensation of thermocouple readings.
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If the software can detect, compensate, avoid, or correct an anomalous condition in the system, it is, by definition, a software problem-regardless of the root cause. In the long run, for most classes of problems, it is cheaper to fix it in the SW
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