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Instructor’s Solutions Manual for Accounting Information Systems 15th Edition by Marshall B Romney, Paul J. Steinbart, Scott L. Summers, David A. Wood 2024 / All Chapters A+

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Instructor’s Solutions Manual for Accounting Information Systems 15th Edition by Marshall B Romney, Paul J. Steinbart, Scott L. Summers, David A. Wood 2024 / All Chapters A+ 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. 1.3 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 ―right answer‖ as there are many right answers and student answers will vary. Instead, it is in thinking through the issues presented in Table 1-2 (business processes, key decisions, and information needs) and Figure 1-1 (interactions with external parties). Student answers should contain many of the things in Table 1-2 and Figure 1-1 as well as others not shown, as a retail operation differs from an application development enterprise. The author concludes the exercise by having the students turn to Table 1-2 and Figure 1-1 while he emphasizes the need for owners, managers, and employees of organizations to identify the information needed to make key decisions in the company’s business processes and the key information interchanges with external parties. All the data needed to produce this information must be entered into the AIS, processed, stored, protected, and made available to the appropriate users. While this active learning activity takes more time than a lecture does, it drives the point home much better than a lecture would. It also keeps the students more engaged in the material. 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. An organization’s AIS must reflect its business processes and its line of business. For example:  Manufacturing companies will need a set of procedures and documents for the production cycle; non-manufacturing companies do not.  Government agencies need procedures to track separately all inflows and outflows from various funds, to ensure that legal requirements about the use of specific funds are followed.  Financial institutions do not need extensive inventory control systems.  Passenger service companies (e.g., airlines, bus, and trains) generally receive payments in advance of providing services. Therefore, extensive billing and accounts receivable procedures are not needed; instead, they must develop procedures to account for prepaid revenue

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Marshall B Romney, Paul J. Steinbart Accounting Information Systems, Global Edition

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Institution: Accounting Information Systems 15th Edition
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Uploaded on: October 17, 2024
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accounting information systems 15th edition
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AccountingvInformationvSystems

Instructor’s SolutionsManual
v v

Accounting Information v

Systems
15th Edition
v

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
Copyrightv(c)v2021vPearsonvEducation,vInc
.

, AccountingvInformationvSystems

ThisvworkvisvprotectedvbyvUnitedvStatesvcopyrightvlawsvandvisvprovidedvsol
elyvforvthevusevofvinstructorsvinvteachingvtheirvcoursesvandvassessingvstude
ntvlearning.vDisseminationvorvsalevofvanyvpartvofvthisvworkv(includingvonvthev
WorldvWidevWeb)vwillvdestroyvthevintegrityvofvthevworkvandvisvnotvpermitted.
Thevworkvandvmaterialsvfromvitvshouldvnevervbevmadevavailablevto
vstudentsvexceptvbyvinstructorsvusingvthe vaccompanyingvtextvinvtheirvclasse

s.
Allvrecipientsvofvthisvworkvarevexpectedvtovabidevbyvthesevrestricti
onsvandvtovhonorvthevintendedvpedagogicalvpurposesvandvthevneedsvofvother
vinstructorsvwhovrelyvonvthesevmaterials.

Copyrightv©v2021vbyvPearsonvEducation,vInc.vorvitsvaffiliates.vAllvRightsvReserved.vManufacture
dvinvthevUnitedvStatesvofvAmerica.vThisvpublicationvisvprotectedvbyvcopyright,vandvpermissionvsho
uldvbevobtainedvfromvthevpublishervpriorvtovanyvprohibitedvreproduction,vstoragevinvavretrievalvsys
tem,vorvtransmissionvinvanyvformvorvbyvanyvmeans,velectronic,vmechanical,vphotocopying,vrecordi
ng,vorvotherwise.vForvinformationvregardingvpermissions,vrequestvforms,vandvthevappropriatevcont
actsvwithinvthevPearsonvEducationvGlobalvRightsvandvPermissionsvdepartment,vpleasevvisitvwww.
pearsoned.com/permissions/.

PEARSON,vALWAYSvLEARNING,vandvREVELvarevexclusivevtrademarksvownedvbyvPearso
nvEducation,vInc.vorvitsvaffiliatesvinvthevU.S.vand/orvothervcountries.

Unlessvotherwisevindicatedvherein,vanyvthird-
partyvtrademarks,vlogos,vorviconsvthatvmayvappearvinvthisvworkvarevthevpropertyvofvtheirvrespectiv
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3-2
Copyrightv(c)v2021vPearsonvEducation,vInc
.

, AccountingvInformationvSystems

chapter 1 v

accounting informationsystems
v v

: An overview
v v

SuggestedvAnswersvtovDiscussionvQuestions

1.1 Thevvaluevofvinformationvisvthevdifferencevbetweenvthevbene
fitsvrealizedvfromvusingvthatvinformationvandvthevcostsvofvp
roducingvit.v Wouldvyou,vorvanyvorganization,vevervproducevi
nformationvifvitsvexpectedvcostsvexceededvitsvbenefits?vIfvs
o,vprovidevsomevexamples.vIfvnot,vwhy?

Mostvorganizationsvproducevinformationvonlyvifvitsvvaluevexc
eedsvitsvcost.v However,vtherevarevtwovsituationsvwherevinfo
rmationvmayvbevproducedvevenvifvitsvcostvexceedsvitsvvalue.

a. Itvisvoftenvdifficultvtovestimatevaccuratelyvthevvaluev
ofvinformationvandvthevcostvofvproducingvit.vTherefore,
vorganizationsvmayvproducevinformationvthatvtheyvexpec

tvwillvproducevbenefitsvinvexcessvofvitsvcosts,vonlyvtovb
evdisappointedvaftervthevfact.
b. Productionvofvthevinformationvmayvbevmandatedvbyveither
vavgovernmentvagencyvorvavprivatevorganization.vExample

svincludevthevtaxvreportsvrequiredvbyvthevIRSvandvdisclo
surevrequirementsvforvfinancialvreporting.

1.2 CanvthevcharacteristicsvofvusefulvinformationvlistedvinvTab
lev1-
1vbevmetvsimultaneously?vOrvdoesvachievingvonevmeanvsacrific
ingvanother?

SeveralvofvthevcriteriavinvTablev1.1vcanvbevmetvsimultaneousl
y.v Forvexample,vmorevtimelyvinformationvis

3-3
Copyrightv(c)v2021vPearsonvEducation,vInc
.

, AccountingvInformationvSystems

alsovlikelyvtovbevmorevrelevant.v Verifiablevinformationvisvl
ikelyvtovbevmorevaccurate.

However,vachievingvonevobjectivevmayvrequirevsacrificingvano
ther.v Forvexample,vensuringvthatvinformationvisvmorevcomple
tevmayvreducevitsvtimeliness.v Similarly,vincreasedvverifia
bilityvandvaccuracyvmayvreducevitsvtimeliness.

Thevdecisionvmakervmustvdecidevwhichvtrade-
offsvarevwarrantedvinveachvsituation.

1.3 Youvandvavfewvofvyourvclassmatesvdecidedvtovbecomeventrepren
eurs.v Youvcamevupvwithvavgreatvideavforvavnewvmobilevphonevap
plicationvthatvyouvthinkvwillvmakevlotsvofvmoney.vYourvbusi
nessvplanvwonvsecondvplacevinvavlocalvcompetition,vandvyouva
revusingvthev$10,000vprizevtovsupportvyourselvesvasvyouvstar
tvyourvcompany.

a. Identifyvthevkeyvdecisionsvyouvneedvtovmakevtovbevsuccess
fulventrepreneurs,vthevinformationvyouvneedvtovmakevthem,v
andvthevbusinessvprocessesvyouvwillvneedvtovengagevin.
b. Yourvcompanyvwillvneedvtovexchangevinformationvwithvvar
iousvexternalvparties.vIdentifyvthevexternalvparties,v
andvspecifyvthevinformationvreceivedvfromvandvsentvtove
achvofvthem.

Thevauthorvturnsvthisvquestionvintovanvin-
classvgroupvactivity.vStudentsvarevdividedvupvinvgroups,vt
oldvtovclosevtheirvbooks,vandvgivenv15vminutesvto:

a. Thinkvthroughvthevbusinessvprocesses,vkeyvdecisions,vand
vinformationvneedsvissuesvinvtheirvgroup.

b. Identifyvthevexternalvusersvofvinformationvandvspeci
fyvthevinformationvreceivedvfromvandvsentvtoveachvofvt
hem.

Onevgroupvisvselectedvtovpresentvtheirvanswersvtovthevclass.v
Thevothervgroupsvarevtoldvtovchallengevthevgroup’svanswers,vp
rovidevalternativevanswers,vandvchipvinvwithvadditionalvans
wersvnotvprovidedvbyvthevselectedvgroup.vSincevthevgroupvtha
tvpresentsvisvnotvselectedvuntilvaftervthevtimevhasvexpired,v
studentsvarevmotivatedvtovdovavgoodvjob,vasvtheyvwillvbevprese
ntingvtovtheirvpeers.

Thevvaluevofvthisvactivityvisvnotvinvarrivingvatva

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Copyrightv(c)v2021vPearsonvEducation,vInc
.

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