Data - Coding systems
Code types | Integrity | Security | Chart of accounts | GST/IRD
| Hotel | Vehicle registration | Inventory
| Answers
Bank accounts
| Road codes | Bar coding
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Business Coding systems |
| The codes around us: Our lives revolve around coding systems. We have a code to describe;
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Different requirements mean different coding systems are required. An amazonian indian would probably have little use for a code such as "lift" or "computer". A botanist will require specialist codes to describe the different classes of flowers and plants. A musician needs to code the sounds made by his or her instrument. A computer professional will have codes to describe equipment used (eg. 2Mbyte RAM).
Hence, all situations require coding systems to be developed so we can distinguish one item from another. This segment will discuss various coding systems used in business situations.
Code types |
There are two basic code types;
Integrity |
Self checking codes can;
Security |
It is possible for codes to inadvertently give other information - a code within a code so to speak.
If a shop has invoice numbers starting from 1 and increasing by 1, a competitor may purchase an item at the beginning of each month, thereby giving the number of invoices issued over that month. By using the average amount of their own invoices they can quickly get an accurate estimate of the competitors turnover.
Chart of accounts |
The most common business coding system is used by accountants to prepare the accounts of an organisation called a Chart of Accounts.
Computer processing of accounting records requires that all transactions are "Coded" to enable the correct allocation of money (debits and credits) to the correct ledger.
This enables the logical sorting of the codes, so that accurate financial reports may be prepared.
This is handled by a "Chart of Accounts", where all the activities of the organisation are coded to a General Ledger Account.
Discuss advantages and disadvantages of using this code.
The following (selection) are possible codes for a Chart of Accounts;
| 1 Revenues 11Operating Revenues 1101 Sales 12 Extraordinary revenue 1201 Law suit damages revenue 2 Expenses 21 Cost of Sales 2101 Purchases 22 Cost of services 2201 Supplies expense 23 Selling expenses 2301 Advertising 24 Administrative expenses 2401 Accounting fees 25 Finance expenses 2501 Bad debts 26 Extraordinary expenses 2601 Law suit damages expense |
3 Assets 31 Current assets 3101 Petty cash 32 Fixed assets 3201 Furniture 33 Investments : 34 Intangibles 3401 Goodwill 4 Liabilities 41 Current liabilities 4101 Accounts payable control 42 Deferred Liabilities 4201 Loan 5 Owner's Equity 5101 Capital |
Advantages
Disadvantages
Additional Notes:
Many 'Charts of Accounts' add additional fields in front of the basic account, when the company has several departments and/or several branches. Hence the code becomes;
Goods and Services Tax (gst) number and Inland Revenue (IRD) number |
The use of these coding systems, require anonymity, so that the number will not reflect the business or location. Hence, their design criteria is different than the usual coding system. Like the Bank Account number, it also has built in checking.
Hotel numbering |
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Exercise 1A common problem occurs in large building complexes. Give at least two advantages and two disadvantages of this code. |
Inventory |
Coding parts or stock is a major area in many businesses. The codes must be as "short as possible" but "as long as necessary", since each part must be uniquely identified, and since there is usually a large number of parts/stock the code should give logical information to a user.
Typically in a modern database, we would code an inventory using the "Bar code" product id, and in the database provide a short and long description of the item.
The following codes are from a local hardware store;
| Code | Description | Code | Description | |
| TREL70 | Trellis diagonal 1800 x 1200 x 60 | 200010 | Loose screws, washers etc | |
| TREL60 | Trellis diagonal 1800 x 900 x 60 | HN0091 | Nail Galv 60x2.8 F/H 500G | |
| R31.51 | Trellis Cap Radiata H3 RS 75 x 40 | 205502 | Padbolt Heavy 150mm galv | |
| R21.56 | Radiata H1 D4S Merch 50 x 40 batten | |||
| RFEN09 | Posts H4 RS 100x100 | |||
| FJM037 | Moulding FJ N028 UT RAD 40x18 D4S |
Consider the case of a Hardware shop.
The following items need to be coded;
Nails, Washers, Screws,
Tools (Hammers, Screwdrivers, etc)
Electrical Goods (Power cords, drills, routers, etc)
Kitchenware(mixing bowls, etc)
Paint
etc;
Answers |
Answers1: Hotel
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Consider: Advantages
* Directions by reception are easily given Disadvantages
* If multi-street level access difficult to determine ground floor |
Answers 2: Inventory
| For given code | Could include: * not consistent between items (eg. Decimal, alphanumeric, integer) |
| Sample Code | A code may be structured around; * Category (Electrical, Kitchen, Handyman, Paint) * Type (Nail, Hammer ) * Size (3mm ) * Feature (Wood, metal etc.) |
| Advantages | Could include; * Short, therefore fast input, Items easily found * Rapid entry -- mostly via numeric keypad. |
| Disadvantages | Cryptic, long Not easily understood Difficult to insert new codes |
