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Coding System

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Coding Systems for Coding Systems for Transaction ProcessingTransaction Processing

• A coding system consists of a character set; that is, a set of admissible predefined symbols that are used to identify the object of interest.

• What are the two purposes of a code?1 It provides a brief identification.2 It gives meaning to data in subsequent

processing.

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Coding Systems for Transaction Processing

• What are some examples of codes?

– numeric codes

– alphanumeric codes

– machine-readable codes

• The universal product code is an example of a bar code.

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• Mnemonic Codes give visible clues concerning the objects they represent

• Sequence Codes are the simplest type of coding scheme that assign numbers or letters in consecutive order

• Block Codes assign a series of numbers within a sequence to entities or events having common features

• Group Codes reveal two or more dimensions or facets pertaining to an object

Coding Systems

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Coding Examples in Accounting Systems

• Codes are widely used in accounting systems.

• What are two common examples?

1 Customer coding

2 Chart of accounts

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Design Considerations in Coding

• Codes should serve some useful purpose

• Codes should be consistent

• Codes should be standardized throughout the organization

• Codes should plan for future expansion

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Coding Examples in Accounting Systems

Typical Account Coding Structure

XX

SubunitClassification

XXXXX

Natural AccountClassification

ActivitySuffix

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Coding Examples in Accounting Systems

X

Detailed account classification

Major account classification

Financial statement classification

Typical Account Coding Structure

XX

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Coding Examples in Accounting Systems

111

Checking account – bank

Asset

Cash

Typical Account Coding Structure