Q58.Write short notes about codification of Over time:
- Importance and Objectives,
- Method of Codification.
- Meaning of Codification: Codification is a technique by which name of expenses and cost center are translated into alphabets or numeric or a combination of both.
- Importance and Objectives of Codification:
- Size of records become smaller
- Easy recording of data.
- Method of Codification:
- Straight Numbering System: It is the simplest method of codification in which a numeric code is allocated for each type of expenses. For example, 25 for stores, 26 for power etc.
- Number Block: In such method, a number block is provided to a specific expenditure which contains a group of expenses. For example, 1 – 25 for indirect material, 26-50 for indirect labor etc.
- Numeric Symbol Both Are Used For Codification: In such system, alphabet symbol represents main head of Expenditure and numeric symbol represents the concerned department.
- Field Method: In this method, each code usually consists of 9 numeric digits. First two digits indicate the nature of expenses, next three digit indicates head of expenses, next two digit indicate analysis of expenses and last digit indicates the cost center.
- Mnemonic Method: In this method, English alphabet are used in coding. For example, R.F. B stands for Repair of Factory Building.