Solutions Manual
For
Accounting
Information Systems
15th Edition
, 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 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.
1-1
.
,Ch. 1: Accounting Information Systems: An Overview
1.3 You Pand Pa Pfew Pof Pyour Pclassmates Pdecided Pto Pbecome Pentrepreneurs. P You Pcame Pup
Pwith Pa Pgreat Pidea Pfor Pa Pnew Pmobile Pphone Papplication Pthat Pyou Pthink Pwill Pmake Plots
Pof Pmoney. P Your Pbusiness Pplan Pwon Psecond Pplace Pin Pa Plocal Pcompetition, Pand Pyou Pare
Pusing Pthe P$10,000 Pprize Pto Psupport Pyourselves Pas Pyou Pstart Pyour Pcompany.
a. Identify Pthe Pkey Pdecisions Pyou Pneed Pto Pmake Pto Pbe Psuccessful Pentrepreneurs, Pthe
Pinformation Pyou Pneed Pto Pmake Pthem, Pand Pthe Pbusiness Pprocesses Pyou Pwill Pneed Pto
Pengage Pin.
b. Your Pcompany Pwill Pneed Pto Pexchange Pinformation Pwith Pvarious Pexternal Pparties.
P Identify Pthe Pexternal Pparties, Pand Pspecify Pthe Pinformation Preceived Pfrom Pand Psent
Pto Peach Pof Pthem.
The Pauthor Pturns Pthis Pquestion Pinto Pan Pin-class Pgroup Pactivity. P Students Pare Pdivided Pup Pin
Pgroups, Ptold Pto Pclose Ptheir Pbooks, Pand Pgiven P15 Pminutes Pto:
a. Think Pthrough Pthe Pbusiness Pprocesses, Pkey Pdecisions, Pand Pinformation Pneeds Pissues Pin
Ptheir Pgroup.
b. Identify Pthe Pexternal Pusers Pof Pinformation Pand Pspecify Pthe Pinformation Preceived Pfrom Pand
Psent Pto Peach Pof Pthem.
One Pgroup Pis Pselected Pto Ppresent Ptheir Panswers Pto Pthe Pclass. P The Pother Pgroups Pare Ptold Pto
Pchallenge Pthe Pgroup’s Panswers, Pprovide Palternative Panswers, Pand Pchip Pin Pwith Padditional
Panswers Pnot Pprovided Pby Pthe Pselected Pgroup. P Since Pthe Pgroup Pthat Ppresents Pis Pnot Pselected
Puntil Pafter Pthe Ptime Phas Pexpired, Pstudents Pare Pmotivated Pto Pdo Pa Pgood Pjob, Pas Pthey Pwill Pbe
Ppresenting Pto Ptheir Ppeers.
The Pvalue Pof Pthis Pactivity Pis Pnot Pin Parriving Pat Pa P“right Panswer” Pas Pthere Pare Pmany Pright
Panswers Pand Pstudent Panswers Pwill Pvary. P Instead, Pit Pis Pin Pthinking Pthrough Pthe Pissues
Ppresented Pin PTable P1-2 P(business Pprocesses, Pkey Pdecisions, Pand Pinformation Pneeds) Pand PFigure
P1-1 P(interactions Pwith Pexternal Pparties). P Student Panswers Pshould Pcontain Pmany Pof Pthe Pthings
Pin PTable P1-2 Pand PFigure P1-1 Pas Pwell Pas Pothers Pnot Pshown, Pas Pa Pretail Poperation Pdiffers Pfrom
Pan Papplication Pdevelopment Penterprise.
The Pauthor Pconcludes Pthe Pexercise Pby Phaving Pthe Pstudents Pturn Pto PTable P1-2 Pand PFigure P1-1
Pwhile Phe Pemphasizes Pthe Pneed Pfor Powners, Pmanagers, Pand Pemployees Pof Porganizations Pto
Pidentify Pthe Pinformation Pneeded Pto Pmake Pkey Pdecisions Pin Pthe Pcompany’s Pbusiness Pprocesses
Pand Pthe Pkey Pinformation Pinterchanges Pwith Pexternal Pparties. P All Pthe Pdata Pneeded Pto Pproduce
Pthis Pinformation Pmust Pbe Pentered Pinto Pthe PAIS, Pprocessed, Pstored, Pprotected, Pand Pmade
Pavailable Pto Pthe Pappropriate Pusers.
While Pthis Pactive Plearning Pactivity Ptakes Pmore Ptime Pthan Pa Plecture Pdoes, Pit Pdrives Pthe Ppoint
Phome Pmuch Pbetter Pthan Pa Plecture Pwould. P It Palso Pkeeps Pthe Pstudents Pmore Pengaged Pin Pthe
Pmaterial.
1-2
.
, Accounting Information Systems
1.4 How P do Pan Porganization’s Pbusiness Pprocesses Pand Plines Pof Pbusiness Paffect Pthe
Pdesign Pof Pits PAIS? P Give Pseveral Pexamples Pof Phow Pdifferences Pamong Porganizations
Pare Preflected Pin Ptheir PAIS.
An Porganization’s PAIS Pmust Preflect Pits Pbusiness Pprocesses Pand Pits Pline Pof Pbusiness. P For Pexample:
• Manufacturing Pcompanies Pwill Pneed Pa Pset Pof Pprocedures Pand Pdocuments Pfor Pthe
Pproduction Pcycle; Pnon-manufacturing Pcompanies Pdo Pnot.
• Government Pagencies Pneed Pprocedures Pto Ptrack Pseparately Pall Pinflows Pand Poutflows
Pfrom Pvarious Pfunds, Pto Pensure Pthat Plegal Prequirements Pabout Pthe Puse Pof Pspecific Pfunds
Pare Pfollowed.
• Financial Pinstitutions Pdo Pnot Pneed Pextensive Pinventory Pcontrol Psystems.
• Passenger Pservice Pcompanies P(e.g., Pairlines, Pbus, Pand Ptrains) Pgenerally Preceive
Ppayments Pin Padvance Pof Pproviding Pservices. P Therefore, Pextensive Pbilling Pand
Paccounts Preceivable Pprocedures Pare Pnot Pneeded; Pinstead, Pthey Pmust Pdevelop
Pprocedures Pto Paccount Pfor Pprepaid Prevenue.
• Construction Pfirms Ptypically Preceive Ppayments Pat Pregular Pintervals, Pbased Pon Pthe
Ppercentage Pof Pwork Pcompleted. P Thus, Ptheir Prevenue Pcycles Pmust Pbe Pdesigned Pto Ptrack
Pcarefully Pall Pwork Pperformed Pand Pthe Pamount Pof Pwork Premaining Pto Pbe Pdone.
• Service Pcompanies P(e.g., Ppublic Paccounting Pand Plaw Pfirms) Pdo Pnot Psell Pphysical Pgoods
Pand, Ptherefore, Pdo Pnot Pneed Pinventory Pcontrol Psystems. P They Pmust Pdevelop Pand
Pmaintain Pdetailed Precords Pof Pthe Pwork Pperformed Pfor Peach Pcustomer Pto Pprovide Pbackup
Pfor Pthe Pamounts Pbilled. PTracking Pindividual Pemployee Ptime Pis Pespecially Pimportant Pfor
Pthese Pfirms Pbecause Plabor Pis Pthe Pmajor Pcost Pcomponent.
1.5 Figure P1-5 Pshows Pthat Porganizational Pculture Pand Pthe Pdesign Pof Pan PAIS Pinfluence Pone
Panother. PWhat Pdoes Pthis Pimply Pabout Pthe Pdegree Pto Pwhich Pan Pinnovative Psystem
Pdeveloped Pby Pone Pcompany Pcan Pbe Ptransferred Pto Panother Pcompany?
Since Ppeople Pare Pone Pof Pthe Pbasic Pcomponents Pof Pany Psystem, Pit Pwill Palways Pbe Pdifficult Pto
Ptransfer Psuccessfully Pa Pspecific Pinformation Psystems Pdesign Pintact Pto Panother Porganization.
P Considering Pin Padvance Phow Paspects Pof Pthe Pnew Porganizational Pculture Pare Plikely Pto Paffect
Pacceptance Pof Pthe Psystem Pcan Pincrease Pthe Pchances Pfor Psuccessful Ptransfer. P Doing Pso Pmay
Penable Pthe Porganization Pto Ptake Psteps Pto Pmitigate Plikely Pcauses Pof Presistance. P The Pdesign Pof
Pan PAIS, Phowever, Pitself Pcan Pinfluence Pand Pchange Pan Porganization’s Pculture Pand Pphilosophy.
P Therefore, Pwith Padequate Ptop Pmanagement Psupport, Pimplementation Pof Pa Pnew PAIS Pcan Pbe
Pused Pas Pa Pvehicle Pto Pchange Pan Porganization. P The Preciprocal Peffects Pof Ptechnology Pand
Porganizational Pculture Pon Pone Panother, Phowever, Pmean Pthat Pit Pis Punrealistic Pto Pexpect Pthat Pthe
Pintroduction Pof Pa Pnew PAIS Pwill Pproduce Pthe Psame Presults Pobserved Pin Panother Porganization.
1-3
.
For
Accounting
Information Systems
15th Edition
, 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 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.
1-1
.
,Ch. 1: Accounting Information Systems: An Overview
1.3 You Pand Pa Pfew Pof Pyour Pclassmates Pdecided Pto Pbecome Pentrepreneurs. P You Pcame Pup
Pwith Pa Pgreat Pidea Pfor Pa Pnew Pmobile Pphone Papplication Pthat Pyou Pthink Pwill Pmake Plots
Pof Pmoney. P Your Pbusiness Pplan Pwon Psecond Pplace Pin Pa Plocal Pcompetition, Pand Pyou Pare
Pusing Pthe P$10,000 Pprize Pto Psupport Pyourselves Pas Pyou Pstart Pyour Pcompany.
a. Identify Pthe Pkey Pdecisions Pyou Pneed Pto Pmake Pto Pbe Psuccessful Pentrepreneurs, Pthe
Pinformation Pyou Pneed Pto Pmake Pthem, Pand Pthe Pbusiness Pprocesses Pyou Pwill Pneed Pto
Pengage Pin.
b. Your Pcompany Pwill Pneed Pto Pexchange Pinformation Pwith Pvarious Pexternal Pparties.
P Identify Pthe Pexternal Pparties, Pand Pspecify Pthe Pinformation Preceived Pfrom Pand Psent
Pto Peach Pof Pthem.
The Pauthor Pturns Pthis Pquestion Pinto Pan Pin-class Pgroup Pactivity. P Students Pare Pdivided Pup Pin
Pgroups, Ptold Pto Pclose Ptheir Pbooks, Pand Pgiven P15 Pminutes Pto:
a. Think Pthrough Pthe Pbusiness Pprocesses, Pkey Pdecisions, Pand Pinformation Pneeds Pissues Pin
Ptheir Pgroup.
b. Identify Pthe Pexternal Pusers Pof Pinformation Pand Pspecify Pthe Pinformation Preceived Pfrom Pand
Psent Pto Peach Pof Pthem.
One Pgroup Pis Pselected Pto Ppresent Ptheir Panswers Pto Pthe Pclass. P The Pother Pgroups Pare Ptold Pto
Pchallenge Pthe Pgroup’s Panswers, Pprovide Palternative Panswers, Pand Pchip Pin Pwith Padditional
Panswers Pnot Pprovided Pby Pthe Pselected Pgroup. P Since Pthe Pgroup Pthat Ppresents Pis Pnot Pselected
Puntil Pafter Pthe Ptime Phas Pexpired, Pstudents Pare Pmotivated Pto Pdo Pa Pgood Pjob, Pas Pthey Pwill Pbe
Ppresenting Pto Ptheir Ppeers.
The Pvalue Pof Pthis Pactivity Pis Pnot Pin Parriving Pat Pa P“right Panswer” Pas Pthere Pare Pmany Pright
Panswers Pand Pstudent Panswers Pwill Pvary. P Instead, Pit Pis Pin Pthinking Pthrough Pthe Pissues
Ppresented Pin PTable P1-2 P(business Pprocesses, Pkey Pdecisions, Pand Pinformation Pneeds) Pand PFigure
P1-1 P(interactions Pwith Pexternal Pparties). P Student Panswers Pshould Pcontain Pmany Pof Pthe Pthings
Pin PTable P1-2 Pand PFigure P1-1 Pas Pwell Pas Pothers Pnot Pshown, Pas Pa Pretail Poperation Pdiffers Pfrom
Pan Papplication Pdevelopment Penterprise.
The Pauthor Pconcludes Pthe Pexercise Pby Phaving Pthe Pstudents Pturn Pto PTable P1-2 Pand PFigure P1-1
Pwhile Phe Pemphasizes Pthe Pneed Pfor Powners, Pmanagers, Pand Pemployees Pof Porganizations Pto
Pidentify Pthe Pinformation Pneeded Pto Pmake Pkey Pdecisions Pin Pthe Pcompany’s Pbusiness Pprocesses
Pand Pthe Pkey Pinformation Pinterchanges Pwith Pexternal Pparties. P All Pthe Pdata Pneeded Pto Pproduce
Pthis Pinformation Pmust Pbe Pentered Pinto Pthe PAIS, Pprocessed, Pstored, Pprotected, Pand Pmade
Pavailable Pto Pthe Pappropriate Pusers.
While Pthis Pactive Plearning Pactivity Ptakes Pmore Ptime Pthan Pa Plecture Pdoes, Pit Pdrives Pthe Ppoint
Phome Pmuch Pbetter Pthan Pa Plecture Pwould. P It Palso Pkeeps Pthe Pstudents Pmore Pengaged Pin Pthe
Pmaterial.
1-2
.
, Accounting Information Systems
1.4 How P do Pan Porganization’s Pbusiness Pprocesses Pand Plines Pof Pbusiness Paffect Pthe
Pdesign Pof Pits PAIS? P Give Pseveral Pexamples Pof Phow Pdifferences Pamong Porganizations
Pare Preflected Pin Ptheir PAIS.
An Porganization’s PAIS Pmust Preflect Pits Pbusiness Pprocesses Pand Pits Pline Pof Pbusiness. P For Pexample:
• Manufacturing Pcompanies Pwill Pneed Pa Pset Pof Pprocedures Pand Pdocuments Pfor Pthe
Pproduction Pcycle; Pnon-manufacturing Pcompanies Pdo Pnot.
• Government Pagencies Pneed Pprocedures Pto Ptrack Pseparately Pall Pinflows Pand Poutflows
Pfrom Pvarious Pfunds, Pto Pensure Pthat Plegal Prequirements Pabout Pthe Puse Pof Pspecific Pfunds
Pare Pfollowed.
• Financial Pinstitutions Pdo Pnot Pneed Pextensive Pinventory Pcontrol Psystems.
• Passenger Pservice Pcompanies P(e.g., Pairlines, Pbus, Pand Ptrains) Pgenerally Preceive
Ppayments Pin Padvance Pof Pproviding Pservices. P Therefore, Pextensive Pbilling Pand
Paccounts Preceivable Pprocedures Pare Pnot Pneeded; Pinstead, Pthey Pmust Pdevelop
Pprocedures Pto Paccount Pfor Pprepaid Prevenue.
• Construction Pfirms Ptypically Preceive Ppayments Pat Pregular Pintervals, Pbased Pon Pthe
Ppercentage Pof Pwork Pcompleted. P Thus, Ptheir Prevenue Pcycles Pmust Pbe Pdesigned Pto Ptrack
Pcarefully Pall Pwork Pperformed Pand Pthe Pamount Pof Pwork Premaining Pto Pbe Pdone.
• Service Pcompanies P(e.g., Ppublic Paccounting Pand Plaw Pfirms) Pdo Pnot Psell Pphysical Pgoods
Pand, Ptherefore, Pdo Pnot Pneed Pinventory Pcontrol Psystems. P They Pmust Pdevelop Pand
Pmaintain Pdetailed Precords Pof Pthe Pwork Pperformed Pfor Peach Pcustomer Pto Pprovide Pbackup
Pfor Pthe Pamounts Pbilled. PTracking Pindividual Pemployee Ptime Pis Pespecially Pimportant Pfor
Pthese Pfirms Pbecause Plabor Pis Pthe Pmajor Pcost Pcomponent.
1.5 Figure P1-5 Pshows Pthat Porganizational Pculture Pand Pthe Pdesign Pof Pan PAIS Pinfluence Pone
Panother. PWhat Pdoes Pthis Pimply Pabout Pthe Pdegree Pto Pwhich Pan Pinnovative Psystem
Pdeveloped Pby Pone Pcompany Pcan Pbe Ptransferred Pto Panother Pcompany?
Since Ppeople Pare Pone Pof Pthe Pbasic Pcomponents Pof Pany Psystem, Pit Pwill Palways Pbe Pdifficult Pto
Ptransfer Psuccessfully Pa Pspecific Pinformation Psystems Pdesign Pintact Pto Panother Porganization.
P Considering Pin Padvance Phow Paspects Pof Pthe Pnew Porganizational Pculture Pare Plikely Pto Paffect
Pacceptance Pof Pthe Psystem Pcan Pincrease Pthe Pchances Pfor Psuccessful Ptransfer. P Doing Pso Pmay
Penable Pthe Porganization Pto Ptake Psteps Pto Pmitigate Plikely Pcauses Pof Presistance. P The Pdesign Pof
Pan PAIS, Phowever, Pitself Pcan Pinfluence Pand Pchange Pan Porganization’s Pculture Pand Pphilosophy.
P Therefore, Pwith Padequate Ptop Pmanagement Psupport, Pimplementation Pof Pa Pnew PAIS Pcan Pbe
Pused Pas Pa Pvehicle Pto Pchange Pan Porganization. P The Preciprocal Peffects Pof Ptechnology Pand
Porganizational Pculture Pon Pone Panother, Phowever, Pmean Pthat Pit Pis Punrealistic Pto Pexpect Pthat Pthe
Pintroduction Pof Pa Pnew PAIS Pwill Pproduce Pthe Psame Presults Pobserved Pin Panother Porganization.
1-3
.
