Accounting Information Systems
Instructor’s Solutions
Manual
Accounting Information
Systems
15th Edition
Marshall B. Romney
Professor Emeritus, Brigham Young University
Paul John Steinbart
Professor Emeritus, Arizona State University
Scott L. Summers
Brigham Young University
David A. Wood
Brigham Young University
3-1
Copyright (c) 2021 Pearson Education, Inc.
, Accounting Information Systems
This work is protected by United States copyright laws and is provided solely
for the use of instructors in teaching their courses and assessing student
learning. Dissemination or sale of any part of this work (including on the
World Wide Web) will destroy the integrity of the work and is not permitted.
The work and materials from it should never be made available to
students except by instructors using the accompanying text in their classes. All
recipients of this work are expected to abide by these restrictions and to
honor the intended pedagogical purposes and the needs of other instructors
who rely on these materials.
Copyright © 2021 by Pearson Education, Inc. or its affiliates. All Rights Reserved.
Manufactured in the United States of America. This publication is protected by copyright,
and permission should be obtained from the publisher prior to any prohibited
reproduction, storage in a retrieval system, or transmission in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise. For information regarding
permissions, request forms, and the appropriate contacts within the Pearson Education
Global Rights and Permissions department, please visit
www.pearsoned.com/permissions/.
PEARSON, ALWAYS LEARNING, and REVEL are exclusive trademarks owned by Pearson
Education, Inc. or its affiliates in the U.S. and/or other countries.
Unless otherwise indicated herein, any third-party trademarks, logos, or icons that may
appear in this work are the property of their respective owners, and any references to
third-party trademarks, logos, icons, or other trade dress are for demonstrative or
descriptive purposes only. Such references are not intended to imply any sponsorship,
endorsement, authorization, or promotion of Pearson’s products by the owners of such
marks, or any relationship between the owner and Pearson Education, Inc., or its affiliates,
authors, licensees, or distributors.
3-2
Copyright (c) 2021 Pearson Education, Inc.
, Accounting Information Systems
Chapter 1 Accounting Information Systems: An overview
Suggested Answers to Discussion Questions
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?
Most organizations produce information only if its value exceeds its cost.
However, there are two situations where information may be produced even if
its cost exceeds its value.
a. It is often difficult to estimate accurately the value of information and
the cost of producing it. Therefore, organizations may produce
information that they expect will produce benefits in excess of its costs,
only to be disappointed after the fact.
b. Production of the information may be mandated by either a
government agency or a private organization. Examples include the tax
reports required by the IRS and disclosure requirements for financial
reporting.
1.2 Can the characteristics of useful information listed in Table 1-1 be met
simultaneously? Or does achieving one mean sacrificing another?
Several of the criteria in Table 1.1 can be met simultaneously. For example,
more timely information is
3-3
Copyright (c) 2021 Pearson Education, Inc.
, Accounting Information Systems
also likely to be more relevant. Verifiable information is likely to be more
accurate.
However, achieving one objective may require sacrificing another. For
example, ensuring that information is more complete may reduce its
timeliness. Similarly, increased verifiability and accuracy may reduce its
timeliness.
The decision maker must decide which trade-offs are warranted in each
situation.
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.
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.
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.
The author turns this question into an in-class group activity. Students are
divided up in groups, told to close their books, and given 15 minutes to:
a. Think through the business processes, key decisions, and information
needs issues in their group.
b. Identify the external users of information and specify the
information received from and sent to each of them.
One group is selected to present their answers to the class. The other groups
are told to challenge the group’s answers, provide alternative answers, and
chip in with additional answers not provided by the selected group. Since the
group that presents is not selected until after the time has expired, students
are motivated to do a good job, as they will be presenting to their peers.
The value of this activity is not in arriving at a
3-4
Copyright (c) 2021 Pearson Education, Inc.
Instructor’s Solutions
Manual
Accounting Information
Systems
15th Edition
Marshall B. Romney
Professor Emeritus, Brigham Young University
Paul John Steinbart
Professor Emeritus, Arizona State University
Scott L. Summers
Brigham Young University
David A. Wood
Brigham Young University
3-1
Copyright (c) 2021 Pearson Education, Inc.
, Accounting Information Systems
This work is protected by United States copyright laws and is provided solely
for the use of instructors in teaching their courses and assessing student
learning. Dissemination or sale of any part of this work (including on the
World Wide Web) will destroy the integrity of the work and is not permitted.
The work and materials from it should never be made available to
students except by instructors using the accompanying text in their classes. All
recipients of this work are expected to abide by these restrictions and to
honor the intended pedagogical purposes and the needs of other instructors
who rely on these materials.
Copyright © 2021 by Pearson Education, Inc. or its affiliates. All Rights Reserved.
Manufactured in the United States of America. This publication is protected by copyright,
and permission should be obtained from the publisher prior to any prohibited
reproduction, storage in a retrieval system, or transmission in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise. For information regarding
permissions, request forms, and the appropriate contacts within the Pearson Education
Global Rights and Permissions department, please visit
www.pearsoned.com/permissions/.
PEARSON, ALWAYS LEARNING, and REVEL are exclusive trademarks owned by Pearson
Education, Inc. or its affiliates in the U.S. and/or other countries.
Unless otherwise indicated herein, any third-party trademarks, logos, or icons that may
appear in this work are the property of their respective owners, and any references to
third-party trademarks, logos, icons, or other trade dress are for demonstrative or
descriptive purposes only. Such references are not intended to imply any sponsorship,
endorsement, authorization, or promotion of Pearson’s products by the owners of such
marks, or any relationship between the owner and Pearson Education, Inc., or its affiliates,
authors, licensees, or distributors.
3-2
Copyright (c) 2021 Pearson Education, Inc.
, Accounting Information Systems
Chapter 1 Accounting Information Systems: An overview
Suggested Answers to Discussion Questions
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?
Most organizations produce information only if its value exceeds its cost.
However, there are two situations where information may be produced even if
its cost exceeds its value.
a. It is often difficult to estimate accurately the value of information and
the cost of producing it. Therefore, organizations may produce
information that they expect will produce benefits in excess of its costs,
only to be disappointed after the fact.
b. Production of the information may be mandated by either a
government agency or a private organization. Examples include the tax
reports required by the IRS and disclosure requirements for financial
reporting.
1.2 Can the characteristics of useful information listed in Table 1-1 be met
simultaneously? Or does achieving one mean sacrificing another?
Several of the criteria in Table 1.1 can be met simultaneously. For example,
more timely information is
3-3
Copyright (c) 2021 Pearson Education, Inc.
, Accounting Information Systems
also likely to be more relevant. Verifiable information is likely to be more
accurate.
However, achieving one objective may require sacrificing another. For
example, ensuring that information is more complete may reduce its
timeliness. Similarly, increased verifiability and accuracy may reduce its
timeliness.
The decision maker must decide which trade-offs are warranted in each
situation.
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.
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.
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.
The author turns this question into an in-class group activity. Students are
divided up in groups, told to close their books, and given 15 minutes to:
a. Think through the business processes, key decisions, and information
needs issues in their group.
b. Identify the external users of information and specify the
information received from and sent to each of them.
One group is selected to present their answers to the class. The other groups
are told to challenge the group’s answers, provide alternative answers, and
chip in with additional answers not provided by the selected group. Since the
group that presents is not selected until after the time has expired, students
are motivated to do a good job, as they will be presenting to their peers.
The value of this activity is not in arriving at a
3-4
Copyright (c) 2021 Pearson Education, Inc.
