Accountancy Part COverview of Computerised Accounting System

Codification of accounts is required for the purpose of :

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Hierarchical relationship between groups and components

Accounts are arranged in groups and sub-groups; codification gives each a code so that the hierarchical relationship between a group and its components is kept and the classification stays neat.

NCERT (2026-27 edition):
Exercises

Extract from the NCERT textbook

NCERT (2026-27 edition):
Answers

Extract from the NCERT textbook

NCERT (2026-27 edition):
Codification of Accounts – “… There is a hierarchical relationship between the groups and its components. In order to maintain the hierarchical relationships between a group and its sub-groups, proper codification is required to ensure neatness of classification.”