Complete Solutions for Accounting Information System 12e by Marshall B. Romney Paul J. Steinbart

Complete Solutions for Accounting Information System 12e by Marshall B. Romney Paul J. Steinbart

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chapter 1

accounting information systems: An overview

1.1      The value of information is the difference between the benefits realized from using that information and the costs of producing it.  Would you, or any organization, ever produce information if its expected costs exceeded its benefits?  If so, provide some examples.  If not, why not?

1.2      Can the characteristics of useful information listed in Table 1-1 be met simultaneously?  Or does achieving one mean sacrificing another?

1.3      You and a few of your classmates decided to become entrepreneurs.  You came up with a great idea for a new mobile phone application that you think will make lots of money.  Your business plan won second place in a local competition, and you are using the $10,000 prize to support yourselves as you start your company.

1.       a.       Identify the key decisions you need to make to be successful entrepreneurs, the information you need to make them, and the business processes you will need to engage in.

2.      b.      Your company will need to exchange information with various external parties.  Identify the external parties, and specify the information received from and sent to each of them.

1.4              How do an organization’s business processes and lines of business affect the design of its AIS?  Give several examples of how differences among organizations are reflected in their AIS.

1.5      Figure 1-4 shows that organizational culture and the design of an AIS influence one another.  What does this imply about the degree to which an innovative system developed by one company can be transferred to another company?

1.6      Figure 1-4 shows that developments in IT affect both an organization’s strategy and the design of its AIS.  How can a company determine whether it is spending too much, too little, or just enough on IT?

1.7      Apply the value chain concept to S&S.  Explain how it would perform the various primary and support activities.

1.8        Information technology enables organizations to easily collect large amounts of information about employees. Discuss the following issues:

1.       To what extent should management monitor employees’ e-mail?

1.       To what extent should management monitor which Web sites employees visit?

1.       c.       To what extent should management monitor employee performance by, for example, using software to track keystrokes per hour or some other unit of time? If such information is collected, how should it be used?

2.      d.      Should companies use software to electronically “shred” all traces of e-mail?

3.      e.      Under what circumstances and to whom is it appropriate for a company to distribute information it collects about the people who visit its Web site?

Problems

1.1      Information technology is continually changing the nature of accounting and the role of accountants. Write a two-page report describing what you think the nature of the accounting function and the accounting information system in a large company will be like in the year 2020.

1.2      Adapted from the CMA Examination

a.    Identify and discuss the basic factors of communication that must be considered in the presentation of the annual report.</para></listitem>

b.    Discuss the communication problems a corporation faces in preparing the annual report that result from the diversity of the users being addressed.

c.     Select two types of information found in an annual report, other than the financial statements and accompanying footnotes, and describe how they are helpful to the users of annual reports.

d.   </inst>Discuss at least two advantages and two disadvantages of stating well-defined corporate strategies in the annual report.</para></listitem>

e.    Evaluate the effectiveness of annual reports in fulfilling the information needs of the following current and potential users: shareholders, c</para></listitem>reditors</para></listitem>, <listitem><para><inst></inst>employees</para></listitem>, c<ustomers, and f</para></listitem>inancial analysts</para></listitem></orderedlist></listitem>

f.     Annual reports are public and accessible to anyone, including competitors.  Discuss how this affects decisions about what information should be provided in annual reports.

1.3      The use of IT at USAA

a.    Why should USAA collect data on which auto parts are fixed most frequently?  What could it do with this data?</para></listitem>

b.   Even though USAA offered to waive the deductible, the repair shops still managed to convince 95% of the owners to replace rather than repair their damaged windshields.  How could USAA use its AIS to persuade more shop owners to repair rather than replace their windows?</para></listitem>

1.       a.      How does the image-processing system at USAA add value to the organization?

2.      b.      How do the remote deposit capture and mobile banking system at USAA add value to the organization?

3.      c.       Do an Internet search and find out what other advancements USAA has introduced.  Write a brief paragraph on each new application or other newsworthy item you find (maximum limit of three applications or items).  

1.4      Match the description in the right column with the information characteristic in the left column.

1.  Relevant	a.  The report was carefully designed so that the data contained on the report became information to the reader
2.  Reliable	b.  The manager was working one weekend and needed to find some information about production requests for a certain customer.  He was able to find the report on the company’s network.
3.  Complete	c.  The data on a report was checked by two clerks working independently
4.  Timely	d.  An accounts receivable aging report that  included all customer accounts
5.  Understandable	e.  A report checked by 3 different people for accuracy
6.  Verifiable	f.  An accounts receivable aging report used in credit granting decisions
7.  Accessible	g.  An accounts receivable aging report was received before the credit manager had to make a decision whether to extend customer credit

1.5   The Howard Leasing Company

1.       a.       What is an accounts receivable aging report?

2.      Why is an accounts receivable aging report needed for an audit?

3.      What is an accounts receivable aging report used for in normal company operations?

4.      What data will you need to prepare the report?

5.      Where will you collect the data you need to prepare the report?

6.      How will you collect the necessary data for the report?

7.      What will the report look like (i.e., how will you organize the data collected to create the information your supervisor needs for the audit)? Prepare an accounts receivable aging report in Excel or another spreadsheet package.

8.     How will you distribute the report? How many copies will you make? Who should receive the copies? What security features will you implement?

1.6      The use of IT at Tesco

a.    What kind of information do you think Tesco gathers? 

1.       a.       How do you think Tesco has motivated over 12 million customers to sign up for its Clubcard program? 

2.      b.      What can Tesco accomplish with the Clubcard data it collects?  Think in term of strategy and competitive advantage.

3.      c.       What are some of the disadvantages to the Clubcard program?

4.      d.      Do an Internet search to find out how Tesco is doing in comparison to Wal Mart and other grocers and retailers.  Write a few paragraphs explaining your findings.

1.7    Have you ever imagined having one electronic device that does everything you would ever need?  Mobile phone makers in Japan have gone beyond the imagining phase.  Cell phones in Japan are becoming more versatile than ever. Newer models of cell phones contain a myriad of applications and can do many of the things that a personal computer (PC) can do.  PCs are also able to function as phones.  A small but growing number of professionals are trading in their laptops for handheld computers.  Cell phone manufacturers in the United States and elsewhere are quickly catching up to their Japanese counterparts.

1.       a.      What commercial activities can be done with a cell phone?  With a cell phone/PC combination device?  What do you do when you’re on your cell phone?  What do you expect to be doing in five years?

b.    How can businesses utilize this technology to attract more customers, sell more products, advertise their products, facilitate the sale of products, and conduct and manage their businesses more efficiently and effectively?

c.     What are some problems or drawbacks you can see with using these devices in business?

1.8     Classify each of the following items as belonging in the revenue, expenditure, human resources/payroll, production, or financing cycle.

1.       Purchase raw materials

2.      Pay off mortgage on factory

3.      Hire a new assistant controller

4.      Establish a $10,000 credit limit for a new customer

5.      Pay for raw materials

6.      Disburse payroll checks to factory workers

7.      Record goods received from vendor

8.     Update the allowance for uncollectible accounts

9.      Decide how many units to make next month

10.  Complete picking ticket for customer order

11.   Record factory employee timecards

12.  Sell concert tickets

13.  Draw on line-of-credit

14.  Send new employees to a business ethics course

15.   Pay utility bills

16.  Pay property taxes on office building

17.   Pay federal payroll taxes

18.  Sell DVD player

19.  Collect payment on customer accounts

20. Obtain a bank loan

21.  Pay sales commissions

22. Send an order to a vendor

23. Put purchased goods into the warehouse

Cases

1-1         The Web site for this book contains an adaption of Russell L. Ackoff’s classic article “Management Misinformation Systems” from Management Science.  In the article, Ackoff identified five common assumptions about information systems and then explained why he disagreed with them.

Read the five assumptions, contentions, and Ackoff’s explanations.  For each of the five assumptions, decide whether you agree or disagree with Ackoff’s contentions.  Prepare a report in which you defend your stand and explain your defense.