Chartered institute of Management Accounting defines a code as “a method of symbols designed to be applied to a classified set of items to give a short precise reference, facilitating entry, collation and evaluation.”
A expense cording method is for that reason based on the selected expense classifications. It is supplies a way of expressing the classification of every single expense in a shortened symbolized form.
The Chartered Institute of Management Accounting terminology describes the use of composite symbols in codes.
THESE CODES ARE Displaying THIS WAS SEMI SKILLED LABOUR
THIS CODE SHOW US THIS LABOUR EXPENDITURE IS TO BE CHARGED AS INDIRECT LABOUR TO THE FINISHING Division IN THE EAST FACTORY.
The advantages of a coding technique
some of the advantages of a properly-designed coding system are as follows
1. Much more appropriate than a description in computerized program.
two. A code reduces ambiguity.
3. A code is usually briefer than description.
The specifications for an efficient coding program
? Need to be special & certain.
? Need to be extensive & elastic.
? Need to be as brief as possible.
? To minimize errors.
? The maintenance of the coding method must be centrally controlled.
? All codes ought to be of the very same length.(wherever achievable)
Concepts of Capital Upkeep and the Determination of Profit
Accountants can select to sustain monetary capital in either nominal monetary units or continual getting power units.
Physical capital is maintained when productive capacity at the end is higher than at the commence of the period.
The principal difference in between the two ideas is the way asset and liability price tag alter effects are treated.
Profit is the excess after the capital at the start off of the period has been maintained.
When accountants choose nominal monetary units, the profit is the enhance in nominal capital.
When accountants pick units of constant buying energy, the profit for the period is the boost in invested acquiring power. Only increases higher than the inflation rate are taken as profit. Increases up to the level of inflation maintain capital and is taken to equity