WEEK 2:

Chart of Accounts
Learning Objectives

1. Explain the coding system and roles of the respective

coding.
2. Explain the chart of accounts and how they function
within the accounting systems.
3. Explain the recording of the transactions.

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Learning Outcomes
1. Examine the coding system and roles of the respective
coding.
2. Analyze chart of accounts and how they represent the
respective accounts in the computer accounting systems.
3. Record the transactions.

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Use of Coding in
Computerized
Accounting Systems
Introduction
 Concisely represent large amounts of complex
information that would otherwise be unmanageable.
 Provide a means of accountability over the completeness
of the transactions processed.
 Identify unique transactions and accounts within a file.
 Support the audit function by providing an effective audit
trail.

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Sequential Codes
 Represent items in sequential order.
 Used to pre-number source documents.

 Track each transaction processed.

 Identify any out-of-sequence documents
 Disadvantages:

 Carry no information content beyond order in the

sequence.
 hard to make changes and insertions.
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Block Codes
 Represent whole classes by assigning each class a specific
range within the coding scheme.
 Used for chart of accounts.
 The basis of the general ledger
 Allows for the easy insertion of new codes within a block.
 Don’t have to reorganize the coding structure
 Disadvantage:
 Not readily apparent unless matched to the chart of
accounts.
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Group Codes
 Represent complex items or events involving two or more
pieces of data using fields with specific meaning.
 For example, a coding scheme for tracking sales might be
04-09-476214-99, mean:
Store No. Dept. No. Item No. Salesperson
04 09 476214 99

 Disadvantages:
 Overused because unrelated data can be linked simply
it can be done.

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Alphabetic Codes
 Used for many of the same purposes as numeric codes.

 Can be assigned sequentially or used in block and group

coding techniques.
 May be used to represent large numbers of items.
 Can represents up to 26 variations per field.
 Disadvantage:
 Difficult in rationalizing meaning and sorting.

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Mnemonic Codes
 Alphabetic characters used as abbreviations, acronyms,
and other types of combinations.
 Do not require users to memorize the meaning since the
code itself is informative. – MY = Malaysia.
 Disadvantages:
 limited usability and availability.

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Chart of Accounts
Assigning Account Numbers
 Structure of Account Number as follows:
AAAA / BBB
Primary code Secondary code

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Guideline: Assigning Account Numbers
Account No. Affected Accounts Account Type
 1XXX/XXX capital, drawing, long term liabilities A,B,C
 2XXX/XXX fixed assets, prov. for depreciation D,E
 3XXX/XXX current assets, prepaid expenses F
 4XXX/XXX current liabilities, accrued expenses G
 5XXX/XXX sales, income, sales return H,I,L,S
 6XXX/XXX all accounts under ‘cost of sales’ J
 7XXX/XXX manufacturing account J
 8XXX/XXX tax, appropriation P,T
 9XXX/XXX expenses, depreciation M
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Creating Chart of Accounts (in UBS system)
 Go to General menu General Ledger A/C Maintenance,
click ‘Add’.
 Key in Account Number = 1000/000, then ‘Enter’.
 Key in Description (name of account) = ‘Capital’, then
‘Enter’. If special account, then key in – refer to drop down
list (the special accounts listed).
 Key in Account Type = ‘A’, then Save.
 Repeat the above steps for the other ACCOUNTS.

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Creating Batches,
Recording the
Transactions and
Reports
Preparing Daybooks - Journals
 Go to Transactions menu Organise Batches, click ‘Add’.
 Key in Batch title= Credit Sales – Jan 2016, then ‘Enter
twice’.
 Repeat the above steps for the other batches.
 Possible list or create all the necessary batches before
starting the transactions.

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Entering Transactions
 Go to Transactions menu Transaction File Maintenance,
click ‘Add’.
 Use ‘Add’ – need to add to debit of one account and credit
of another account.
 Use of ‘Quick’ – when one is debited, another account will
be credited automatically provided that this account is
designated as the Master Account.
 Click ‘Save’ once completed.

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Viewing/Printing Reports
 Go to Reports menu select the reports that intended,
then follow instruction to specify what report is needed
actually.

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References
 Mark G. Simkin, James L. Worrell, Arline A. Savage (2018), Core
Concepts of Accounting Information Systems, 14th Edition, Wiley.
 Bagranoff, N.A.,Simkin, M.G. and Norman, C. S. (2014), Core
Concpets of Accounting Information Systems, 13th Edition, Wiley.
 Dull, R. B. , Gelinas, U. J. and Wheeler, P. R. (2012), Accounting
Information Systems Foundations in Enterprise Risk Management,
9th Edition, South-Western, Cengage Learning.
 Hall, J. (2011), Principles of Accounting Information Systems, Asia
Edition, South-Western, Cengage Learning.
 Brodnar, G. H. and Hopwood, W. S. (2006), Accounting Information
Systems, Ninth Edition, Pearson – Prentice Hall.
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References
 Curtis, G. and Cobham, D. (2008) Business Information Systems:
Analysis, Design and Practice, Financial Times/ Prentice Hall
 Rainer, R and Turner E (2009), Introduction to Information Systems,
Wiley.
 Stair, R., Reynolds, R. and Chesney, T. (2008) Fundamentals of
Business Information Systems, Cengage
 Hall, J.A., (2011) & (2007), Accounting Information Systems, 5th & 7th
Edition, International Student Edition, Thomson South-Western, US.

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References
• Romney, M. & Steinbart, P. (2006) Accounting Information Systems,
Upper Saddle River, New Jersey, Pearson Education.
• Boczko, T. (2007), Corporate Accounting Information Systems, Financial
Times/Prentice Hall
• Dale Klooster, Warren Allen (2006). Integrated Accounting for Windows
(with Integrated Accounting Software CD-ROM). outh-Western College
Pub
• Bernard J. Bieg and Judith A. Toland (2008). Payroll Accounting 2009.
South-Western College Pub
• James A. Heintz and Robert W. Parry (2007). Klooster & Allen General
Ledger Software. Heintz/Parry's College Accounting

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