Q.What is meant by grouping of accounts in a Computerised Accounting System?

This short-answer question asks specifically for the meaning of grouping, one of the two organisational techniques (grouping and codification) studied in this chapter.

Grouping of accounts is one of the two organisational techniques (the other being codification) that make it possible for a Computerised Accounting System to generate fast, reliable reports from the large number of individual ledger accounts a business keeps.

Grouping means classifying individual ledger accounts under broader heads, or 'groups', that share a common accounting nature. For instance, the individual account of each separate customer is placed under the group Sundry Debtors, the individual account of each separate supplier is placed under the group Sundry Creditors, and various individual asset accounts such as buildings, machinery and furniture are placed under the group Fixed Assets. Similarly, individual expense accounts of a similar nature may be grouped under headings such as Direct Expenses or Indirect Expenses, and individual accounts may also be grouped under Current Assets, Current Liabilities, Capital, and Sales, among others. …

Students sometimes confuse 'grouping' with 'codification' and describe assigning a code instead of describing the classification of accounts under common heads; the two a …