A:It's a cross-referencing code, usually a number or a few numbers and letters. It connects two separate records, such as connecting a T-account to a journal.
For example under the T-account "Bank" there is a folio "CPJ1" next to a particular transaction relating to "equipment." "CPJ1" stands for "Cash Payments Journal 1." If you looked in this cash payments journal you could find that transaction listed under the same date and probably also showing "equipment" purchased.
The purpose of the folios (codes) is to be able to trace transactions easily to different records, such as from the ledger to the journal.