Method of Codification should be:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Such that it leads to grouping of accounts
The coding scheme of account heads is built so that accounts fall into groups at various levels, which lets the system produce the Balance Sheet and the Statement of Profit and Loss straight from the codes. This question is the book’s own exercise item, and the book’s answer is (a), the same words as Option (4).
NCERT (2026-27 edition):
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