Scribd
Upload
11 views2 pages

Chapter 8

Uploaded by

Mohd Sumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
11 views2 pages

Chapter 8

Uploaded by

Mohd Sumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

CHAPTER 8: CODING SYSTEMS

8.1 Coding Systems: An Introduction


A code is a set of characters used to identify an item. E.g.
scan-able barcodes and QR codes at supermarkets. A coding
system is the way in which codes are created, managed and
used, this is often determined by the computerized accounting
software package which contains suggested codes and a ready-
made chart of accounts. An effective coding system should be:
logical (easy-to-understand); concise (long enough to hold
necessary detail); consistent (same approach throughout the
organization); unique; expandable (sufficient room for
expansion and additional detail).

8.2 Types of Coding Systems


A chart of accounts is a document that contains
comprehensive details about the codes in use. 5 types of
coding systems: sequential; block (divided into blocks that
represent different categories. e.g. 0000-0999 current assets,
1000-1999 liabilities, etc.); faceted (broken down into multiple
groups of character ranges within one code, each representing
different characteristics.); hierarchical (faceted, but each
character is a subset of the group represented by its previous
one. They have a parent-child relationship.); and mnemonic (a
memory triggering code). A mixed code combines more than
one of the systems mentioned above.
8.3 The Use of Codes in Accounting Systems
Codes help facilitate inputting, processing and outputting in
the accounting system.

8.4 The Advantages of Using Coding


Systems
Advantages: efficient data entry; easier to surf through data
and analyze information; saves time; and reduces confusions
and misunderstandings.
The more logical a coding system is, the easier it becomes to
identify errors before, during or after data entry.
When correcting coding errors after data entry, it is essential
to leave behind an audit trail/record that allows a future viewer
to be confident that a correction has been made. This is done
by first reversing the initial incorrect entry then posting the
transaction again, but correctly this time.

You might also like