DATA CODING

DATA CODING
Coding can be defined as the assignment of symbols according to a plan.
systematic, to distinguish certain phenomena and establish their arrangement within a
determined classification.
The need for classification arises from the need to record, mask, organize,
identify, group and classify phenomena and to facilitate their recording and transmission.

The general objective of a code is to identify a phenomenon or element or

relate it to a specific group, in such a way that the coded items can
to be decoded as efficiently as possible through an index or guide. The
code provides a substitute for the normal name or value of the encoded item, the
which from the perspective of information consists of an irrelevant set of
characters.

Coding systems identify using symbols such as letters and/or

numbers, elements of a set or subset and relates them to other elements of the
same set or subset. The effective functioning of an accounting system would be
impossible if all accounting transactions were not identified and coded
some way, for example, to record the reference of an invoice, the accountant assigns to
a document a string of characters in the form FC-XXXXX with the number of the
corresponding invoice and this process is carried out for each document, whether drafts, notes
of debit, credit notes or other documents; a sequential numbering is assigned to
the documents to control their use, prevent their loss, facilitate their search, declare
any loss, misplacement or misuse. At all times, it must be kept in mind that a
a computer can only identify and operate on data if it has been previously
stored under a logical organization scheme. The factors to consider for the
the selection of a specific coding method is: the chosen system must comply
with the requirements [***] for information processing and secondly,
Previous silo codes will be processed manually or through a computer.

BASIC CHARACTERISTICS OF A CODING SYSTEM

Every coding system must possess a set of minimum characteristics in order to
to be adopted as a processing method for information. Within those
we can find characteristics:

✔ Code Accuracy
It means that a coding system must accept only one correct encoding for
each element of a set. For example: to each person who opens an account
current in a bank, it must be assigned a single code, and this must be unique for that
account, so it cannot be used in another account opened by the same client, or for
another client.

✓ Flexibility
It means that the code structure must accommodate more elements in case that it
I need to add them. One of the most common problems that arise in the
accounting codes, it is the lack of flexibility of the assigned codes, for not taking into account
count the future operations of the company. Taking the example of an accounting code
we have two situations:

✓ Concise
Un código conciso establece que no se deben adicionar códigos que no tengan relevancia
At the moment of identifying a given element, that is to say, each element of the code must be
clearly identified and not subject to confusion.

✓ Significant
This code must identify the differential type of the elements that are being encoded.
In this way, the transaction being carried out can be distinguished or identified by the code.
processing.

✔ Operability
The operability in a coding system means that the defined codes can
should be easily handled by a mechanized computing system. It must be taken into
it says that a computer mainly understands codes that are easy to
operability.

CODING SYSTEMS
The methods in which they are beneficial with the application of data coding
they are the following:
✓ Sequential
It consists of the consecutive assignment of a number to a list of elements starting from
a predetermined number.

✔ By blocks
It represents a derivation of the sequential, since under this method the codes are
they are assigned sequentially, but in blocks of consecutive digits that identify
some characteristic of the element to be encoded.

✔ By group
This method is another derivation of sequential coding that subdivides classifications.
successive.

✔ Alphanumeric
Under this method, an alphabetic code is assigned alongside a numerical code that has in
list the characteristics of the element to be encoded.
An example is represented by the license plates of cars:
XEH-301
LVA-203
VEC-100

✔ Mnemonic
It is a combination of numbers and letters to identify each one by various characteristics.
one of the elements.

✔ With verification digit

It consists of adding a number or letter to a sequence of characters based on a
redefined algorithm.
The error consists of writing a wrong character when transcribing the code.
in the position of the correct character.

Place 12845 instead of 12345

✓ Of Consonants
It consists of removing all the vowels that come after the first letter of the word.

✔ Phonetics
Encode the elements according to their sound.

✓ Of bars
We increasingly find ourselves in supermarkets, grocery stores, and in
general, in many outlets, with a diversity of products displayed in the
I packaged a series of bars of different widths.
The barcoding is the assignment of lines and spaces of different widths that
they are printed on a product for its identification.
The Venezuelan Association for the International Coding of Products CIP calculates the
verification digit W (13th digit) and the product is encoded in the following way.
759 – XXXX – YYYYY - W
País – Empresa - Producto - Verificación

CHARACTERISTICS OF A CODIFICATION ACCOUNTING SYSTEM

Every accounting code must be designed under certain parameters that allow it to comply.
with the information requirements requested by the users. It should be designed to
such a way that it meets the various objectives of accounting, it always adjusts to the
specific needs of the company and, in addition, cover special circumstances and
the individual cases that may arise.
The chart of accounts is the main structure of an accounting system that will allow generating
relevant optimal information. A principle that should be considered when designing a
accounting code, is its simplicity, without losing sight of common sense.
International Accounting Standards (IAS)
One of the international accounting standards that are applicable in the definition of
the classification of an accounting code is NIC 5:
The regulation that has been in force since January 1, 1977. It establishes that
general and specific form, the classification that should be followed in the financial statements
for each of the main areas of these.

✓ Flexibility
It means that an accounting code must be designed in such a way that it allows,
subsequently, add new classifications or details that are required under the
existing conditions. This feature is extremely important when they arise
new information requirements applicable to businesses.

✔ Appropriate Classification
Indicates that an accounting code should be classified according to accounting standards.
that establishes the profession. The ideal situation or objective of every accounting system from the
point of view on the classification that items in the financial statements must receive
It is about preparing these directly from the accounts that make up the figures.
in a trial balance for example and make a minimal amount of adjustments and
the reclassifications in the reports.

✓ Hierarchical
The hierarchical organization of an accounting code must establish subdivisions for each one of
the groups and subgroups of items that make up the financial statements, for the purpose of
present the information to the level of detail that is required.

✔ Clarity in Descriptions
One of the important aspects for the design of the account code is clarity in
the descriptions and designations of the accounting accounts, with the aim of associating and
establish a direct relationship between the account description and its nature.
Generally, mechanized accounting systems provide enough space for
positions for the descriptions or denominations of the accounts.

CHART OF ACCOUNTS
Concept
It is a document that has an analytical and orderly list of accounts or items that are
they are used in the record of the accounting operations of a company. It is also
understood as an ordered and encoded list of the accounts used in the system
accountant of an entity in order to identify its names and/or numbers
corresponding, regularly serves to systematize the accounting of a company.
It is a set of accounts that the company will use for the registration of its
operations, developed according to your needs, to generate the states
financial resources necessary for the administrative management of a company.
It is the quantified and classified structure of the transcription of the amounts of the invoices.
receipts or other supports in the DEBIT or in the CREDIT of the Journal Book, and it will depend on the type
of the accounting account and its nature for classification.
It is a detailed and classified list or numbering of the concepts that integrate the
Assets, Liabilities, and Equity, as well as the income and expenses of an entity.
economic.
It contains all the accounts that are estimated to be necessary at the time of installing a
accounting system.
Objectives of the Chart of Accounts:
The chart of accounts is considered a highly valuable accounting tool, its
the purpose is to provide the necessary elements for adequate order and
classification of the accounting accounts used or to be used by the economic entity.
The chart of accounts must be structured in such a way that, in addition to being
apegado a los Principios de Contabilidad Generalmente Aceptados, y sujetarse a las
Company accounting policies must allow for easy understanding of classification and
coding that each account has allowing for accounting impacts
they are done with the least probability of error possible.
The preparation of an account catalog has the following objectives:
✓ Allow the establishment of accounts for recording operations.
✓ Structure the organization of the accounts by sections.
✅ Ensure the correct formulation of the Financial Statements.
✓ Structurally analyze the accounting system implemented, including the system of
costs, in the case of industrial companies and service companies.
✓ Group homogeneous operations and facilitate their accounting.
✓ In case of an audit, lighten the auditor's work.
✓ It facilitates its handling, even its memorization.
✓ Allow for changes that may arise, such as deletion or
inclusion of accounts.
Functions of the Chart of Accounts:
✓ Serve as a means of assistance for the training of personnel working in the area
accountant.
✓ To inform the staff working in the accounting area about the account structure of
general accounting system.
✔ Facilitate accounting work, especially when it comes to consolidating figures
financial.
✔ Consistently and uniformly ensure the correct presentation of reports
financial.
✓ Provide a guide for the proper recording of operations through the
accounting entries.
✔ Facilitate and satisfy the need for daily registration of the operations of a
company or entity.
Development of an Account Plan
The design of the chart of accounts represents the structural basis of the accounting model and its
Visualization facilitates the capture and navigation of the history of financial economic life
of the companies.
The preparation of this catalog can be done in the following way:
✓ Numérica: Consiste en fijar un número progresivo a cada cuenta, debiendo crearse
account groups according to the structure of the financial statements.
✓ Decimal: It consists of bringing together the accounts of a company using numbers.
digits, for each group, having to create account groups according to the
structure of the Financial Statements, and in turn, subdivide each group into 10
concepts such as maximum, and so on.
✔ Alphabetical: The letters of the alphabet are used, assigning one to each account, but first
forming account groups according to the structure of the Financial Statements.
✓ Alphabetic or alphanumeric: The initial letters of the groups are used and
subgroups, but in the case that there were two groups or two concepts with the same
the initial letter will also employ another one that serves as a distinction and that
It is part of the account name to facilitate its identification.
✓ Combined: Two or more previous systems are used.
The meaning of the hierarchical levels that constitute the structure of the Chart of Accounts
Heritage assets are as follows:

1.- Establish the main sections of the balance sheet and income statement.
General Group: The first position of the chart of accounts, made up of a digit, constitutes
one of the main parts that identify the nature of the accounts.
Its purpose is to indicate the classification that the General Ledger Accounts must have in the
Financial Statements
The account groups, represented by the numbers one (1) to seven (7), are:
BALANCE SHEET
Group Code
01. Active
02. Passive
03. Heritage
04. Order Accounts
STATEMENT OF PROFITS AND LOSSES
Group Code
05. Operating Income
06. Cost of Sales
07. Operating Expenses
08. Other Income and Expenses
09. Closing Accounts

2.- Define or specify the format of the accounting code in digits and levels.
The account catalogs are structured by levels, the number of these as well as the
The name or number assigned to them will depend directly on the needs.
particulars, of the economic entity in question. We can find different ways to
organize and structure the various account catalogs.
Its structure allows the formation of groupings that range from general concepts to
particulars, which consists of six (6) positions and nine (9) digits, that
represent in the following way:
Graph of the account code structure
Format Characteristics
9-9-999 Five digits, three levels
99. Five digits, three levels
99. Six digits, four levels
999. Seven digits, three levels
99. Seven digits, four levels
9-9-9-9-999-99 Nine digits, six levels

3.- Once steps 1 and 2 are completed, we must begin developing the accounting code.
properly speaking. According to the classifications given by accounting theory and the
information needs of the company.
Select the financial subgroups for each section of the balance sheet and income statement.
results, Integrated by a digit, constitutes the second position of the chart of accounts, the
which is used to identify the classification of the 'Group' intended in the first position.
Assets, Liabilities, and Equity
Circulating Circulating
Available Social Benefits
Long-term liabilities payable
Other liabilities realizable
Capital Social Funds
Investments Undistributed earnings
Tangible fixed assets
Intangible fixed asset
Other assets
Order accounts
A higher level of detail is shown in the following
1 Active
1.1 Circulante
Available
[Link] Box
102. Banks
[Link] Fixed Funds

3.8 CLASSIFICATION OF ACCOUNTS

Las cuentas en la contabilidad financiera se clasifican por su función y por su estructura

CLASSIFICATION BY FUNCTION:

a) Real accounts or balance accounts

b) Nominal or income accounts
c) Off-balance sheet accounts

CLASSIFICATION BY THE STRUCTURE OF ACCOUNTS

CUENTAS PRINCIPALES O DE MAYOR

These are the accounts that are recorded in the General Ledger and Balances.

Auxiliary accounts
They are the accounts that derive from the main accounts and are used to summarize or total.
the balance of the Main or Major accounts

REAL OR BALANCE ACCOUNTS

They are those that represent the resources and obligations that at a given moment the
business or company (on a given date), understanding by resources all those assets that it has
the company and that allow it to develop its social purpose, that is, the production of goods or
services.

In accounting terminology, resources are referred to as Assets. The obligations of the company
It has with third parties is referred to in the same terminology as Assets, meaning obligations.
internals.
These accounts make up the general purpose financial statement, called
Balance Sheet or Financial Position Statement because it shows what the company has or owes.
At a certain moment, it is similar to a snapshot taken of the company.
when it passes through a point of the space-time continuum in which it moves towards the future. This
The photograph shows what the company has and owes at the time it was made.
State. It is then a static Financial State.

nominal or result accounts

These are the accounts that represent the income and expenses resulting from the operations that
the company has had within a specific period between two dates. These accounts
they have a transitory or temporary nature, their duration is the same as the accounting period.
income statements begin or originate from January 1 of each year and must be settled
mandatory by December 31. This group of accounts makes up the Financial Statement
called Income Statement or Profit and Loss Statement. It can be considered the
Income Statement with a video recording of the economic exploitation result of
the social object of the company during an accounting period. It is therefore a dynamic statement since
show the movement between two dates. The income accounts represent a profit
Income (Ingreso) or a loss (Egreso) for the company originated from the development of the social object of
the same.

ORDER ACCOUNTS

These are accounts that represent values that do not belong to the company, nor are
obligations of the same, but which may in the future represent a resource or an obligation
for the economic entity and therefore must be recorded and disclosed in the States
Financial by control. These accounts control the economic facts that do not affect the
resources of the entity (Assets), its external or internal obligations (Liabilities and Equity), but that
the operations that generate them represent some type of responsibility for the company or
they can become a resource or an obligation for her in the future. They can be from
debit or credit nature. They are also called memorandum accounts.

The order accounts are presented within the Statement of Financial Position or Balance Sheet.
without being part of it. Its location is at the foot of it, after the equal sums, those of
debit nature below the total of assets and credit nature below the total of liabilities
and Heritage. These accounts are characterized by not requiring double entry,
for being a control annotation, but to be consistent with this paradigm, the use of the
double entry registering two accounts that have the same name but differ
because one of them is added the suffix 'on the contrary.'

CHARACTERISTICS OF AN ACCOUNTING CODE

All accounting code must be designed under certain parameters that allow it to
fulfill the information requirements requested by the users. It must
be designed in such a way that it meets the different objectives of the
accounting, should always adjust to the specific needs of the entity and,
In addition, cover the special circumstances and individual cases that may arise.
to introduce oneself.

Flexibility

Flexibility means that an accounting code must be designed in such a way

that later allow adding new classifications or details that are
they require under the existing conditions. These characteristics are extremely
important when new information requirements applicable to the
institutions.

Description. denomination
The chart of accounts is a list that presents the necessary accounts for
record accounting events. It is a systematic arrangement of
all the accounts that are part of an accounting system. To facilitate the
recognition of each of the accounts, the chart of accounts is usually
encoded. This process involves the assignment of a symbol, which can be
a number, a letter or a combination of both, to each account. The
the most common mnemonic system for coding a chart of accounts is the
decimal numeric, which allows unlimited groupings and facilitates the task of
add and intersperse new accounts. For example: 1 Asset, 1.1 Asset
corriente, 1.2 Activo no corriente, 1.1.1 Caja y bancos, 1.1.2 Inversiones
currents. Generally, the chart of accounts is supplemented with a
manual of accounts, which presents the necessary instructions for the
use of the accounts that are part of the accounting system. The plan of
accounts, ultimately, provides a basic structure for the organization of
accounting system, which appears as a means

Symbolism #2
It refers to the set or system of symbols to which value is assigned or conferred.
a precise meaning is established along with the rules regarding its application...

ACCOUNTING CODING SYSTEM

It is that coded accounting system that companies use to identify
the operations that it commonly performs, to obtain ...

PURPOSES OF A ACCOUNTING CODING SYSTEM.

a) Provide the information in an appropriate manner and according to the needs of the
company.
b) Express each of the business divisions individually.
c) Allow an adequate differentiation between real and nominal accounts.
d) Provide the appropriate classification for each of the groups that constitute both
the real accounts as well as the nominal ones.

Levels of Accounting Hierarchy

Hierarchy is a structure that is established according to its criteria of
subordination among people, animals, values, and dignities. Such a criterion may
superiority, inferiority, anteriority, posteriority, etc.; that is to say, any
categorical quality of gradation agent that characterizes its interdependence.
Example to explain:

ACCOUNTING CODE DOCUMENTATION

The account code documentation is carried out through the Code Manual.
Accounting that details each and every account, its nature and the
concepts for which debits or credits are made.