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Data Coding Schemes

Numeric, alphabetic, mnemonic, and group coding schemes are used to represent items and transactions in accounting systems. Numeric schemes include sequential, block, and group codes. Alphabetic and mnemonic codes provide meaning through acronyms or sequences. The general ledger system collects transaction summaries and inputs them into financial reporting. Journal vouchers are a source of general ledger entries, and the general ledger database stores master files, histories, and other accounting information used to prepare standard financial statements and regulatory reports through the financial reporting process.

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Jovanie Cadungog
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107 views

Data Coding Schemes

Numeric, alphabetic, mnemonic, and group coding schemes are used to represent items and transactions in accounting systems. Numeric schemes include sequential, block, and group codes. Alphabetic and mnemonic codes provide meaning through acronyms or sequences. The general ledger system collects transaction summaries and inputs them into financial reporting. Journal vouchers are a source of general ledger entries, and the general ledger database stores master files, histories, and other accounting information used to prepare standard financial statements and regulatory reports through the financial reporting process.

Uploaded by

Jovanie Cadungog
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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DATA CODING SCHEMES

Numeric Coding Schemes


• Sequential

-sequential codes represent items in some sequential order


(ascending or descending)

-This number becomes the transaction number that allows the


system to track each transaction processed and to identify any lost or out-
of-sequence documents.
• Advantages:
• supports the reconciliation of a batch of transactions, such as sales orders, at
the end of processing

• it alerts management to the possibility of a missing or misplaced transaction

• By tracing the transaction number back through the stages in the process,
management can eventually determine the cause and effect of the error
• Disadvantages:

• Sequential codes carry no information content beyond their order in


the sequence

• sequential coding schemes are difficult to change


Block Codes
• numeric block code is a variation on sequential coding that partly
remedies the disadvantages just described

• can be used to represent whole classes of items by restricting each class to


a specific range within the coding scheme
Advantage
• allows for the insertion of new codes within a block without having to
reorganize the entire coding structure

Disadvantage

• the information content of the block code is not readily apparent


Group Codes
• Numeric group codes are used to represent complex items or events
involving two or more pieces of related data. The code consists of zones or
fields that possess specific meaning.
Advantages:
• facilitates the representation of large amounts of diverse data
• allows complex data structures to be represented in a hierarchical form that is
logical and more easily remembered by humans
• permits detailed analysis and reporting both within an item class and across
different classes of items
Disadvantage:
• they tend to be overused; unrelated data may be linked simply because it can be
done.
• overuse can increase storage costs, promote clerical errors, and increase
processing time and effort
Alphabetic Codes
• used for many of the same purposes as numeric codes. Alphabetic characters
may be assigned sequentially (in alphabetical order) or may be used in block
and group coding techniques

Advantage:
capacity to represent large numbers of items is increased dramatically through
the use of pure alphabetic codes or alphabetic characters embedded within
numeric codes (alphanumeric codes)
Disadvantage:

• there is difficulty rationalizing the meaning of codes that have been


sequentially assigned

• users tend to have difficulty sorting records that are coded alphabetically
Mnemonic Codes
• are alphabetic characters in the form of acronyms and other combinations
that convey meaning
Advantages:
• The mnemonic coding scheme does not require the user to memorize
meaning; the code itself conveys a high degree of information about the
item that is being represented.

Disadvantages:
• they have limited ability to represent items within a class
The General Ledger System

• Summaries of special journals and subsidiary accounts flow into the GLS
and become sources of input for the financial reporting system (FRS)
Journal Voucher
• source of input to the general ledger

• can be used to represent summaries of similar transactions or a single


unique transaction, identifies the financial amounts and affected general
ledger (GL) accounts

• routine transactions, adjusting entries, and closing entries are all entered
into the GL via journal vouchers
GLS Database
• The GLS database includes a variety of files; will vary from firm to firm
Examples:
a. general ledger master file
b. general ledger history file
c. journal voucher file
d. journal voucher history file
e. responsibility center file
f. budget master file
Financial Reporting System
• The law dictates management’s responsibility for providing stewardship
information to external parties. This reporting obligation is met via the
FRS. Much of the information provided takes the form of standard
financial statements, tax returns, and documents required by regulatory
agencies such as the Securities and Exchange Commission (SEC).
Financial Reporting Procedure
1. Capture the transaction
2. Record in special journal
3. Post to subsidiary ledger
4. Post to general ledger
5. Prepare the unadjusted trial balance
6. Make adjusting entries
7. Journalize and post adjusting entries
8. Prepare the adjusted trial balance
9. Prepare the financial statements
10. Journalize and post the closing entries
11. Prepare the post-closing trial balance
eXtensible business reporting language (XBRL)
• AICPA encouraged research into the creation of an accounting-specific
markup language. XBRL is an XML-based language that was designed to
provide the financial community with a standardized method for
preparing, publishing, and automatically exchanging financial
information, including financial statements of publicly held companies.
XBRL is typically used for reporting aggregated financial data, but can
also be applied to communicating information pertaining to individual
transactions.
XBRL Reporting Process

1. The first step is to select an XBRL taxonomy.


2. Cross-refer each account in the organization’s general ledger to an
appropriate XBRL taxonomy element (tag).
3. Mapping the organization’s internal data to XBRL taxonomy elements.

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