Accounting Information Systems
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Instructor’s Solutions
Manual
Accounting Information
Systems
15th Edition
3-1
Copyright (c) 2021 Pearson Education, Inc.
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, Accounting Information Systems
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3-2
Copyright (c) 2021 Pearson Education, Inc.
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, Accounting Information Systems ig ig
chapter 1 ig
accountinginformationsystems ig i
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: An overview
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Suggested Answers to Discussion Questions
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1.1 The value of information is the difference between the benef
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its realized from using that information and the costs of pro
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ducing it. Would you, or any organization,ever produce inf
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ormation if its expected costs exceededits benefits? If so, p
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rovide some examples. If not, why?ig ig ig ig ig
Most organizations produce information only if its valueexce
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eds its cost. However, there are two situations where inform
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ation may be produced even if its cost exceeds its value.
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a. It is often difficult to estimate accurately the value o
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f information and the cost of producing it. Therefore, o
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rganizations may produce information that they expect w ig ig ig ig ig ig ig
ill produce benefits in excess ofits costs, only to be dis
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appointed after the fact. ig ig ig
b. Production of the information may be mandated by either a ig ig ig ig ig ig ig ig ig
government agency or a private organization. Examples i
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nclude the tax reports required by the IRS and disclosureig ig ig ig ig ig ig ig ig
requirements forfinancial reporting.
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1.2 Can the characteristics of useful information listed inTabl
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e 1-
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1 be met simultaneously? Or does achieving onemean sacrifici
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ng another?
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Several of the criteria in Table 1.1 can be met simultaneously
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. For example, more timely information is
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3-3
Copyright (c) 2021 Pearson Education, Inc. ig ig ig ig ig
, Accounting Information Systems ig ig
also likely to be more relevant.
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kely to be more accurate. ig ig ig ig
However, achieving one objective may require sacrificinganot ig ig ig ig ig ig i
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her. For example, ensuring that information is morecomplete
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may reduce its timeliness. Similarly, increased verifiabi
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lity and accuracy may reduce its timeliness.
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The decision maker must decide which trade-
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offs arewarranted in each situation.
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1.3 You and a few of your classmates decided to become entreprene
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urs. You came up with a great idea for a newmobile phone appl
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ication that you think will make lots of money. Your business
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plan won second place in a local competition, and you are usin
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g the $10,000 prize to support yourselves as you start your co
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mpany.
a. Identify the key decisions you need to make to be successfu ig ig ig ig ig ig ig ig ig ig
l entrepreneurs, the information you need tomake them, and
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the business processes you will need to engage in.
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b. Your company will need to exchange information withvario
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us external parties. Identify the external parties, and
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specify the information received from and sent to each of ig ig ig ig ig ig ig ig ig
them. ig
The author turns this question into an in-
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class groupactivity. Students are divided up in groups, to
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ld toclose their books, and given 15 minutes to:
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a. Think through the business processes, key decisions,and ig ig ig ig ig ig i
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information needs issues in their group. ig ig ig ig ig
b. Identify the external users of information and specif ig ig ig ig ig ig ig
y the information received from and sent toeach of them
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.
One group is selected to present their answers to the class. Th
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e other groups are told to challenge the group’s answers, prov
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ide alternative answers, and chip in with additional answers
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not provided by the selected group. Since the group that prese
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nts is not selected until after the time has expired, students
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are motivatedto do a good job, as they will be presenting to the
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ir peers.ig
The value of this activity is not in arriving at a
ig ig ig ig ig ig ig ig ig ig
3-4
Copyright (c) 2021 Pearson Education, Inc. ig ig ig ig ig
ig ig
Instructor’s Solutions
Manual
Accounting Information
Systems
15th Edition
3-1
Copyright (c) 2021 Pearson Education, Inc.
ig ig ig ig ig
, Accounting Information Systems
ig ig
3-2
Copyright (c) 2021 Pearson Education, Inc.
ig ig ig ig ig
, Accounting Information Systems ig ig
chapter 1 ig
accountinginformationsystems ig i
g
: An overview
ig ig
Suggested Answers to Discussion Questions
ig ig ig ig
1.1 The value of information is the difference between the benef
ig ig ig ig ig ig ig ig ig
its realized from using that information and the costs of pro
ig ig ig ig ig ig ig ig ig ig
ducing it. Would you, or any organization,ever produce inf
ig i g ig ig ig ig i
g ig ig
ormation if its expected costs exceededits benefits? If so, p
ig ig ig ig ig i
g ig ig ig ig
rovide some examples. If not, why?ig ig ig ig ig
Most organizations produce information only if its valueexce
ig ig ig ig ig ig ig i
g
eds its cost. However, there are two situations where inform
ig ig i g ig ig ig ig ig ig
ation may be produced even if its cost exceeds its value.
ig ig ig ig ig ig ig ig ig ig
a. It is often difficult to estimate accurately the value o
ig ig ig ig ig ig ig ig ig
f information and the cost of producing it. Therefore, o
ig ig ig ig ig ig ig ig ig
rganizations may produce information that they expect w ig ig ig ig ig ig ig
ill produce benefits in excess ofits costs, only to be dis
ig ig ig ig ig i
g ig ig ig ig ig
appointed after the fact. ig ig ig
b. Production of the information may be mandated by either a ig ig ig ig ig ig ig ig ig
government agency or a private organization. Examples i
ig ig ig ig ig ig ig ig
nclude the tax reports required by the IRS and disclosureig ig ig ig ig ig ig ig ig
requirements forfinancial reporting.
ig ig i
g ig
1.2 Can the characteristics of useful information listed inTabl
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g
e 1-
ig
1 be met simultaneously? Or does achieving onemean sacrifici
ig ig ig ig ig ig ig i
g ig
ng another?
ig
Several of the criteria in Table 1.1 can be met simultaneously
ig ig ig ig ig ig ig ig ig ig
. For example, more timely information is
i g ig ig ig ig ig
3-3
Copyright (c) 2021 Pearson Education, Inc. ig ig ig ig ig
, Accounting Information Systems ig ig
also likely to be more relevant.
ig ig ig ig ig i g Verifiable informationis li ig i
g ig
kely to be more accurate. ig ig ig ig
However, achieving one objective may require sacrificinganot ig ig ig ig ig ig i
g
her. For example, ensuring that information is morecomplete
i g ig ig ig ig ig ig i
g i
may reduce its timeliness. Similarly, increased verifiabi
g ig ig ig i g ig ig
lity and accuracy may reduce its timeliness.
ig ig ig ig ig ig
The decision maker must decide which trade-
ig ig ig ig ig ig
offs arewarranted in each situation.
ig i
g ig ig ig
1.3 You and a few of your classmates decided to become entreprene
ig ig ig ig ig ig ig ig ig ig
urs. You came up with a great idea for a newmobile phone appl
i g ig ig ig ig ig ig ig ig ig i
g ig ig
ication that you think will make lots of money. Your business
ig ig ig ig ig ig ig ig ig ig ig
plan won second place in a local competition, and you are usin
ig ig ig ig ig ig ig ig ig ig ig
g the $10,000 prize to support yourselves as you start your co
ig ig ig ig ig ig ig ig ig ig ig
mpany.
a. Identify the key decisions you need to make to be successfu ig ig ig ig ig ig ig ig ig ig
l entrepreneurs, the information you need tomake them, and
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g ig ig ig
the business processes you will need to engage in.
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b. Your company will need to exchange information withvario
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g
us external parties. Identify the external parties, and
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specify the information received from and sent to each of ig ig ig ig ig ig ig ig ig
them. ig
The author turns this question into an in-
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class groupactivity. Students are divided up in groups, to
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ld toclose their books, and given 15 minutes to:
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a. Think through the business processes, key decisions,and ig ig ig ig ig ig i
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information needs issues in their group. ig ig ig ig ig
b. Identify the external users of information and specif ig ig ig ig ig ig ig
y the information received from and sent toeach of them
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g ig ig
.
One group is selected to present their answers to the class. Th
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e other groups are told to challenge the group’s answers, prov
ig ig ig ig ig ig ig ig ig ig
ide alternative answers, and chip in with additional answers
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not provided by the selected group. Since the group that prese
ig ig ig ig ig ig ig ig ig ig
nts is not selected until after the time has expired, students
ig ig ig ig ig ig ig ig ig ig ig
are motivatedto do a good job, as they will be presenting to the
ig i
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ir peers.ig
The value of this activity is not in arriving at a
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3-4
Copyright (c) 2021 Pearson Education, Inc. ig ig ig ig ig
