CHAPTER 2 Different kinds of Code

AIS in the Business World 1.Sequential Coding

-Is a system that collects,store, and process financial and -Represent items in sequential order
accounting data.
-hard to make changes and insertion

Accounting and Bookkeeping

2.Block Coding
Accounting
-Represent whole class by assigning each class a specific
-Process of identifying, measuring and communicating range within the coding scheme.
economic information to permit informed judgement and
decision by users of the information.

3.Hierarchical Codes

Bookkeeping -Each digit/block of digits conveys important information to

people who know the code.
-Essential for any practicing accountant,but knowing the
rules and producers of bookkeeping,is by no means sufficient
to guarantee's success in the accounting profession.
4.Mnemonic Codes

-Alphabetic characters used as abbreviations, acronyms,and

Accounting Cycle other types of combinations.

-Is a set of processes in doing transactions

HUMAN JUDGEMENT AND INFORMATION TECHNOLOGY

Transactions come in two basic types in most accounting -Using information technology tools to assist in the collection,
information system; processing, and dissemination of accounting information is
the norm in most modern organizations.
1.External Transactions
Human judgment comes into play in the AIS in at least the
2.Internal Transactions following ways:

1.Designing source documents. Source documents should be

clear and easy to read, omit unnecessary information, and
Coding System provide plenty of space for filling in required data.

-Process of assigning codes or symbol to different elements of

financial transaction.
2.Recognizing recordable transactions. Not every
-Codes can be Alphanumeric or Numeric document in an AIS indicates a record- able transaction;
further, not every recordable transaction is represented by a
source document.
Manual AIS

 Hands-on qnd requires more time and effort. 3.Estimating amounts and interpreting accounting rules.
 One of the oldest form of bookkeeping and doesn't Many journal entries, particu- larly adjusting entries, require
require a computer. the use of estimates.

Automated AIS CRITICAL THINKING

 Makes your accounting more reliable
 A system or a set of processes for collecting data
about accounting transaction.
-recognizing transactions that should be recorded in the AIS
and creating a coding system for a chart of accounts.
- AIS requires critical thinking and a solid understanding of
accounting principles.