Q.Explain the meaning and advantages of codification of accounts in a Computerised Accounting System.

This essay question asks for both the meaning of codification and the practical advantages it gives a business using a Computerised Accounting System.

Codification (or coding) of accounts means assigning a unique numeric, alphabetic, or alphanumeric code to each individual account and to each group of accounts, so that every account can be identified, sorted, searched and processed by the accounting software quickly and unambiguously, purely by its code, rather than by matching text names that could be spelt inconsistently or duplicated across different accounts with similar names.

Codification offers several genuine advantages to a business using a Computerised Accounting System. First, it allows the computer to identify and retrieve any particular account instantly, without the confusion that similar or identical account names might otherwise cause. Second, it speeds up data entry, since a short code can generally be entered more quickly and with fewer errors than typing out a full account name each time a voucher is prepared. Third, it supports systematic, hierarchical grouping of accounts: a code can be structured so that its first few digits indicate the broad group an account belongs to (for example, current assets) while its later digits identify the specific account within that group, allowing reports to be summarised at any level of detail the business requires. Fourth, it reduces the risk of an entry being posted to the wrong account, since a properly assigned code uniquely identifies one account only, unlik …

A weak answer describes only the meaning of codification without going on to explain its concrete advantages, even t …