The need for codification is:

The correct answer is Option (3) → The encryption of data

A code is a system of letters or figures with an arbitrary meaning, used for brevity and machine processing. Codification turns account names into such symbols and lets accounts be grouped in a set order.

• Option (1) To secure the account, reports etc. — Incorrect. Security of accounts comes from passwords and access rights, not from codes.

• Option (2) Easy to process data, keeping proper records — Incorrect. Easy processing and proper records are benefits of a coded system, but the book’s answer to the need of codification is encryption of data.

• Option (3) The encryption of data — Correct. A code stands for the information in a coded (encrypted) form rather than in plain words.

• Option (4) The generation of mnemonic code — Incorrect. A mnemonic code is one kind of code; generating it is codification itself, not the need for it.