ANSWER EXERCISE TOPIC 4

QUESTION 1

a) Advantages of data coding in AIS are:

i) Concisely representing large amounts of complex information that would

otherwise be unmanageable.

ii) Providing a means of accountability over the completeness of the transactions

processed.

b)

Account Description Code

Cash 110

Account Receivables 120

Vehicle 210

Account Payable 310

Capital 410

Sales 510

Cost of Goods Sold 700

Rent Expense 610

QUESTION 2

i) Mnemonic Code

ii)

Account Description Code

Capital 410

Vehicle 210

Accounts Payable 310

Inventory 110

Office Equipment 220

Short term loan 320

Cash 120

Accounts Receivable 130

QUESTION 3

a)

Product/Size Silk Fuji Chiffon

S M L S

Caftan CAFSIS CAFSIM CAFFUL CAFCIS

Baju Kurung BKSIS BKSIM BKFUL BKCIS

Scarf SCASIS SCASIM SCAFUL SCACIS

Pario PARSIS PARSIM PARFUL PARCIS

 b) The disadvantage of mnemonic code is limited in their ability to represent items within a

class.

QUESTION 4

a) Companies use coding schemes in their AISs because codes concisely represent large

amounts of complex information that would otherwise be unmanageable. They also

provide a means of accountability over the completeness of the transactions processed

and identify unique transactions and accounts within a file.

b)

Stocks Sequential Mnemonic Block Group

CD – movie 1001 CDM 1001 10M

CD – song 1002 CDS 1005 10S

CD – games 1003 CDG 1010 10G

VCD – movie 1004 VCDM 3001 20M

VCD – children 1005 VCDC 3005 20C

VCD – fiction 1006 VCDF 3010 20F

DVD – movie 1007 DVDM 5030 30M

DVD – children 1008 DVDC 5050 30C

DVD – education 1009 DVDE 5090 30E

c)

Advantage Disadvantage

Sequential Allows the system to track each Arbitrary information

transaction processed and to identify Hard to make changes and

any out-of-sequence documents. insertions-renumbering.

Mnemonic Do not require the user to memorize the Limited in their ability to

meaning; the code itself conveys a high represent items within a

degree of information. class.

Block Allows for the insertion of new codes Arbitrary information – less

within a block without having to meaningful.

reorganize the entire coding structure.

Group Allow complex data structures to be Overused – due to

represented in a hierarchical form that presentation of diverse

is logical and more easily remembered information.

by humans.

d)

 Sequential - Allows the system to track each transaction processed and to identify any

out-of-sequence documents.

 Block - Allows for the insertion of new codes within a block without having to

reorganize the entire coding structure.

 Group - Used to represent complex items or events involving 2 or more pieces of

related data.
  Mnemonic - Do not require the user to memorize the meaning; the code itself conveys

a high degree of information.

QUESTION 5

a) Explain ONE (1) advantage and ONE (1) disadvantage of the following coding scheme in

General Ledger and Reporting Systems. Provide ONE (1) example for each coding

scheme.

i. Sequential

Advantage Disadvantage Example

 Any gap detected in the  The codes carry little. if  Serial numbering of

sequence is a signal any, information other cheques

that a transaction may than the sequence order.  Serial numbering

be missing  Difficult to manage when source documents

 Able to sort ascending items need to be added:  such as PO begins

or descending sequence the sequence needs either with 10000 and the

block to be reordered or the next number is 10001

items must be added to the

end of the list.

ii. Block

Advantage Disadvantage Example

 restricting each class to  the information content  a chart of accounts

a pre-specified range does not provide much 100-200 Capital

  spaced in intervals in meaning 200-300 Revenues

case of future additions  an account number onlv 500-800 Expenses

means something if the

chart of accounts is

known.

iii. Mnemonic

Advantage Disadvantage Example

The meaning aspect easy Limited in their ability to  In Fill in some forms

to understand represent items within a for Sex, F for Female,

class. M for Male

 BKAS2013

B stands for Business

KA is for Accounting

School

S area in subject

2013, 3 is credit hour

2000 is level

b)

i) Capture the transaction

ii) Record in special journal

iii) Post to subsidiary ledger

 iv) Post to general ledger

v) Prepare the unadjusted trial balance

QUESTION 6

General ledger master file – principal FRS file based on chart of accounts

General ledger history file – used for comparative financial report

Journal voucher file – all journal vouchers of the current period

Journal voucher history file – journal vouchers of past periods for audit trail

Responsibility center file – financial data by responsibility centers for MRS

Budget master file – budget data by responsibility centers for MRS

QUESTION 7

A journal voucher is used to make entries into the general ledger accounts. The information may

be a summary of many transactions or a single, unique transaction.

Journal vouchers must be approved by an authorized person, and thus provide an effective

control against errors and unauthorized general ledger entries.