Following are the three methods of codification.
(a) Sequential Codes:
(i) In sequential code, numbers and/or letters are assigned in consecutive order.
(ii) These codes are applied primarily to source documents such as cheques, invoices, etc.
(iii) A sequential code can facilitate document search. For example:
CODE ACCOUNTS:
CL001 ABC LTD
CL002 XYZ LTD
CL003 SCERT
(b) Block Codes:
(i) In a block code, a range of numbers is partitioned into a desired number of sub-ranges and each sub-range is allotted to a specific group;
(ii) Inmost of the cases of block codes, numbers within a sub-range follow sequential coding scheme, i.e. the numbers increase consecutively. For example:
CODE DEALER- TYPE :
100 - 199 Small pumps
200 - 299 Medium pumps
300 - 399 Pipes
400 - 499 Motors
(c) Mnemonic Codes:
A mnemonic code consists of alphabets or abbreviations as symbols to codify a piece of information.
For example:
CODE:
SJ Sales Journals
HQ Head Quarters

The following are the limitations of trial balance.
(i) It is possible to prepare trial balance of an organisation, only if the double entry system is followed.
(ii) Even if some transactions are omitted, the trial balance will tally.
(iii) Trial Balance may tally even though errors are committed in the books of account.
(iv) If trial balance is not prepared in a systematic way, the final accounts prepared on the basis of trial balance may not depict the actual state of affairs of the concern.
(v) Agreement of trial balance is not a conclusive proof of the arithmetical accuracy of entries made in the accounting records.

The need for accounting standards is as follows:
1. To Promote better understanding of financial statements.
2. To help accountants to follow uniform policies and practices.
3. To facilitate meaningful comparison of financial statements of two or more entities.
4. To enhance reliability of financial statements.
5. To meet the legal requirements effectively.

(i) Accounting Standards provide the framework and norms so that the financial statements of different enterprises become comparable.
(ii) It becomes necessary to standardise the accounting principles and policies to ensure consistency, comparability, adequacy and reliability of financial reporting.
(iii) Accounting standards in India are issued by the Institute of Chartered Accountants of India (lCAI).
Definition:
In the words of Kohler, "Accounting standards are codes of conduct imposed by customs, law or professional bodies for the benefit of public accountants and accountants generally".

(i) Investors :
1. Persons who are interested in investing their surplus funds should know about the financial condition of a business unit while making their investment decisions.
2. They are more concerned about future earnings and risk bearing capacity of the organisation which will affect the return to the investors.
(ii) Government :
1. The scarce resources of the country are used by business enterprises.
2. Information about performance of business units in different industries helps the government in policy formulation for development of trade and industry, allocation of scarce resources, grant of subsidy, etc.
3. Government also administers prices of certain commodities.

Yes, it is possible for him to compare his business results with that of his competitors, but the method is not accurate. It may be approximated i.e., capital comparison method followed.

The accountant provides accounting information to various interested users for analysis as per their requirements.

No, because there are several persons using of accounting systems:
1. Internal users \(\longrightarrow\) Owners, management
2. External users \(\longrightarrow\) Creditors, bankers

In calculation of the due date three extra days are added, to the specified period of the bill is called "Days of grace".

The physical components of a computer constitute its hardware. Hardware consists of input devices and output devices that make a complete computer system. Examples of input devices are keyboard, optical scanner, mouse, joystick, touch screen and slylus which are used to feed data into the computer. Output devices such as monitor and printer are media to get the ouput from the computer.

Amount of depreciation per year = \(Original\ cost\ of\ the\ asset − Estimated\ scrap\ value\over Estimated\ useful\ life\ of\ the\ asset\ in\ years\)
\(={2,50,000 – 15,000\over 10}={2,35,000\over 10}\) = Rs.47,000 per year
Rate of depreciation = \({Amount\ of\ depreciation\ per\ year\over Original\ cost}\times100\)
\(={47,000\over 2,50,000}\times100=18.8\%\)

(i) Under this method, the amount spent on the purchase of an asset is regarded as an investment. As such, the interest at a certain rate is calculated on the opening balance of the asset account each year and debited to the asset account.
(ii) The amount of depreciation written off is ascertained by- referring to the annuity table. Annual depreciation is uniform throughout the working life of the asset.

The following are the different methods of providing depreciation:
(i) Straight line method or Fixed instalment method or Original cost method
(ii) Written down value method or Diminishing balance method
(iii) Sum of years of digits method
(iv) Machine hour rate method
(v) Depletion method
(vi) Annuity method
(vii) Revaluation method
(viii) Sinking fund method
(ix) Insurance policy method

(i) An expenditure, which is revenue expenditure in nature, the benefit of which is to be derived over a subsequent period or periods is known as deferred revenue expenditure.
(ii) The benefit usually accrues for a period of two or more years.
(iii) It is for the time being, deferred from being charged against income.

i) The effect of heavy advertisement expenses will extend to more than one accounting period, but it does not create any property of tangible or intangible nature and hence it is deferred revenue expenditure.
ii) It is a capital expenditure since it is incurred up to the point the machine is ready for use.
iii) These are capital expenditures since they are incurred up to the point the machine is ready for use.

The difference between Sales book and Sales Account are:

Debit Balances = 1) Bills receivable; 2) Opening Stock 3) Land and Building; 4) Goodwill; 5) Carriage outwards; 6) Electricity charges
Credit Balances = 7) Reserve Fund; 8) Provision for Bad debts.

(i) Accountancy is the process of managing the income and expenses of a business firm.
(ii) Recording, classification and reporting are some key tasks of accountancy.
(iii) Accountancy is a branch of knowledge where as accounting is the action or process