Answer Exercise Topic 4

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
 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
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.

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ANSWER EXERCISE TOPIC 4

a) Advantages of data coding in AIS are:

i) Concisely representing large amounts of complex information that would

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

Account Description Code

Account Receivables 120

Account Payable 310

Cost of Goods Sold 700

Rent Expense 610

Account Description Code

Accounts Payable 310

Office Equipment 220

Short term loan 320

Accounts Receivable 130

Product/Size Silk Fuji Chiffon

Caftan CAFSIS CAFSIM CAFFUL CAFCIS

Baju Kurung BKSIS BKSIM BKFUL BKCIS

Scarf SCASIS SCASIM SCAFUL SCACIS

Pario PARSIS PARSIM PARFUL PARCIS

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.

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

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.

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

degree of information. class.

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.

reorganize the entire coding structure.

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

a high degree of information.

Advantage Disadvantage Example

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

block to be reordered or the next number is 10001

items must be added to the

end of the list.

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

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

means something if the

Advantage Disadvantage Example