SM 1.1
p
, Chapter 1 p
ACCOUNTING INFORMATION SYSTEMS AND THE ACCOUNTANT p p p p p
Discussion Questions p
1-1. The answer to this question will vary with each university’s location. However, it is
p p p p p p p p p p p p p
likely most students will reveal that their parents are employed in non-manufacturing jobs.
p p p p p p p p p p p p p
Instructors may wish to emphasize that the large numbers of service sector employees and
p p p p p p p p p p p p p
knowledge workers reflect a trend.
p p p p p
1-2. This question encourages students to think about some of the information
p p p p p p p p p p
reporting limitations imposed by the traditional accounting general ledger architecture.
p p p p p p p p p p
p Other business activities (or business events) that do not require journal entries include (1)
p p p p p p p p p p p p p
obtaining a line of credit, (2) issuing purchase requisitions or purchase orders, (3) signing
p p p p p p p p p p p p p p
contracts, (4) hiring a new executive, and (5) sending financial information to investors or
p p p p p p p p p p p p p p
bank loan personnel.
p p p
Instructors may wish to point out that important information about a company’s business
p p p p p p p p p p p p
activities may be included in an annual report outside the financial statements. The
p p p p p p p p p p p p p
management letters and footnotes in annual reports may reveal much about a company’s
p p p p p p p p p p p p p
future prospects.
p p
Managers have access to much more information than what is published in financial reports.
p p p p p p p p p p p p p
Whether or not they would like to have access to more non-financial information, or if they
p p p p p p p p p p p p p p p p
would prefer that the accounting information system capture data about business events
p p p p p p p p p p p p
rather than accounting transactions, is debatable. It may also be a function of the accounting
p p p p p p p p p p p p p p p
system in a particular company. Investors may wish to have more information available to
p p p p p p p p p p p p p p
them but the downside is that too much information can be just as problematic as too little
p p p p p p p p p p p p p p p p p
information.
p
1-3. The financial accounting systems we have known for more than 500 years are
p p p p p p p p p p p p
SM 1.2 p
,changing dramatically as a result of advances in information technology and financial
p p p p p p p p p p p p
accounting software. For example, databases allow accountants to collect and store all the
p p p p p p p p p p p p p
data (accounting transaction data and non-financial data) about a business activity or event in
p p p p p p p p p p p p p p
one system, allowing those needing such information to retrieve it quickly, efficiently, and
p p p p p p p p p p p p p
specifically in any format they wish. Financial data can also be more easily linked to
p p p p p p p p p p p p p p p
nonfinancial data because of database technology. Thus, it is likely that financial reporting
p p p p p p p p p p p p p
will undergo tremendous change in the next few years as we learn to use technology,
p p p p p p p p p p p p p p p
including artificial intelligence, more effectively in the design of AISs.
p p p p p p p p p p
ERP systems are another example of the information age's impact on financial accounting.
p p p p p p p p p p p p
p Now, organizations capture more financial and non-financial data and produce more
p p p p p p p p p p
information than ever before. This allows companies to integrate their information systems,
p p p p p p p p p p p p
better forecast everything from raw materials requirements to finished product production,
p p p p p p p p p p p
and to perform more sophisticated analyses of important business functions. For instance,
p p p p p p p p p p p p
sales can be examined at many different levels and organized according to criteria such as
p p p p p p p p p p p p p p p
geography, customer, product, or salesperson.
p p p p p
SM 1.3 p
, One of the most important changes in AISs is the way these systems will gather financial
p p p p p p p p p p p p p p p
information in the future. Although many of these systems will continue to capture data in
p p p p p p p p p p p p p p p
traditional batch mode or at POS sites, we expect newer systems to collect more of it on
p p p p p p p p p p p p p p p p p
mobile devices—for example, cell phones, PDAs, and digital cameras. Because more
p p p p p p p p p p p
employees and working at home these days, “digital commuting” may be another trend.
p p p p p p p p p p p p p
1-4. The objective of a company’s financial statements is to communicate relevant
p p p p p p p p p p
financial information to such external parties as stockholders, investors, and government
p p p p p p p p p p p
agencies. Issuing financial statements in XBRL formats contributes to this objective by making
p p p p p p p p p p p p p
such financial data more searchable, comparable, informative, and therefore useful. Also,
p p p p p p p p p p p
because XBRL enables companies to use standard tags to identify specific accounting values,
p p p p p p p p p p p p p
the language itself imposes a greater degree of standardization in the informational content
p p p p p p p p p p p p p
of the reports. Finally, XBRL helps government agencies gather financial data that are more
p p p p p p p p p p p p p p
consistent, easier to understand, self-checking, and more quickly communicated. Chapter 2
p p p p p p p p p p p
contains more about XBRL, including the idea that the language also enables its users to verify
p p p p p p p p p p p p p p p p
accounting relationships as assets = liabilities + stockholder equity.
p p p p p p p p p
1-5. The questions asked here about suspicious activity reporting (SAR) require
p p p p p p p p p
opinions from students. Regarding the first question, which asks if SAR activity should be a
p p p p p p p p p p p p p p p
legal matter, there is little room for disagreement because so much of SAR is mandated by
p p p p p p p p p p p p p p p p
federal legislation such as the Annunzio-Wylie Anti-Money Laundering Act of 1992, the Bank
p p p p p p p p p p p p p
Secrecy Act of 1996, and the Patriot Act of 2001. Although there are statistics on the number
p p p p p p p p p p p p p p p p p
of SAR filings, less is known about how much of what appears to be suspicious are in fact
p p p p p p p p p p p p p p p p p p
violations of federal statutes.
p p p p
1-6. The example given in the question demonstrates one way in which
p p p p p p p p p p
computerization has refined cost estimation and thus has impacted managerial accounting.
p p p p p p p p p p p
p However, IT has impacted almost every area of managerial accounting (and decision
p p p p p p p p p p p
making). Consider, for example, the emergence of such concepts as just-in-time systems,
p p p p p p p p p p p p
computer integrated manufacturing systems, manufacturing resource planning systems,
p p p p p p p p
SM 1.4 p
p
, Chapter 1 p
ACCOUNTING INFORMATION SYSTEMS AND THE ACCOUNTANT p p p p p
Discussion Questions p
1-1. The answer to this question will vary with each university’s location. However, it is
p p p p p p p p p p p p p
likely most students will reveal that their parents are employed in non-manufacturing jobs.
p p p p p p p p p p p p p
Instructors may wish to emphasize that the large numbers of service sector employees and
p p p p p p p p p p p p p
knowledge workers reflect a trend.
p p p p p
1-2. This question encourages students to think about some of the information
p p p p p p p p p p
reporting limitations imposed by the traditional accounting general ledger architecture.
p p p p p p p p p p
p Other business activities (or business events) that do not require journal entries include (1)
p p p p p p p p p p p p p
obtaining a line of credit, (2) issuing purchase requisitions or purchase orders, (3) signing
p p p p p p p p p p p p p p
contracts, (4) hiring a new executive, and (5) sending financial information to investors or
p p p p p p p p p p p p p p
bank loan personnel.
p p p
Instructors may wish to point out that important information about a company’s business
p p p p p p p p p p p p
activities may be included in an annual report outside the financial statements. The
p p p p p p p p p p p p p
management letters and footnotes in annual reports may reveal much about a company’s
p p p p p p p p p p p p p
future prospects.
p p
Managers have access to much more information than what is published in financial reports.
p p p p p p p p p p p p p
Whether or not they would like to have access to more non-financial information, or if they
p p p p p p p p p p p p p p p p
would prefer that the accounting information system capture data about business events
p p p p p p p p p p p p
rather than accounting transactions, is debatable. It may also be a function of the accounting
p p p p p p p p p p p p p p p
system in a particular company. Investors may wish to have more information available to
p p p p p p p p p p p p p p
them but the downside is that too much information can be just as problematic as too little
p p p p p p p p p p p p p p p p p
information.
p
1-3. The financial accounting systems we have known for more than 500 years are
p p p p p p p p p p p p
SM 1.2 p
,changing dramatically as a result of advances in information technology and financial
p p p p p p p p p p p p
accounting software. For example, databases allow accountants to collect and store all the
p p p p p p p p p p p p p
data (accounting transaction data and non-financial data) about a business activity or event in
p p p p p p p p p p p p p p
one system, allowing those needing such information to retrieve it quickly, efficiently, and
p p p p p p p p p p p p p
specifically in any format they wish. Financial data can also be more easily linked to
p p p p p p p p p p p p p p p
nonfinancial data because of database technology. Thus, it is likely that financial reporting
p p p p p p p p p p p p p
will undergo tremendous change in the next few years as we learn to use technology,
p p p p p p p p p p p p p p p
including artificial intelligence, more effectively in the design of AISs.
p p p p p p p p p p
ERP systems are another example of the information age's impact on financial accounting.
p p p p p p p p p p p p
p Now, organizations capture more financial and non-financial data and produce more
p p p p p p p p p p
information than ever before. This allows companies to integrate their information systems,
p p p p p p p p p p p p
better forecast everything from raw materials requirements to finished product production,
p p p p p p p p p p p
and to perform more sophisticated analyses of important business functions. For instance,
p p p p p p p p p p p p
sales can be examined at many different levels and organized according to criteria such as
p p p p p p p p p p p p p p p
geography, customer, product, or salesperson.
p p p p p
SM 1.3 p
, One of the most important changes in AISs is the way these systems will gather financial
p p p p p p p p p p p p p p p
information in the future. Although many of these systems will continue to capture data in
p p p p p p p p p p p p p p p
traditional batch mode or at POS sites, we expect newer systems to collect more of it on
p p p p p p p p p p p p p p p p p
mobile devices—for example, cell phones, PDAs, and digital cameras. Because more
p p p p p p p p p p p
employees and working at home these days, “digital commuting” may be another trend.
p p p p p p p p p p p p p
1-4. The objective of a company’s financial statements is to communicate relevant
p p p p p p p p p p
financial information to such external parties as stockholders, investors, and government
p p p p p p p p p p p
agencies. Issuing financial statements in XBRL formats contributes to this objective by making
p p p p p p p p p p p p p
such financial data more searchable, comparable, informative, and therefore useful. Also,
p p p p p p p p p p p
because XBRL enables companies to use standard tags to identify specific accounting values,
p p p p p p p p p p p p p
the language itself imposes a greater degree of standardization in the informational content
p p p p p p p p p p p p p
of the reports. Finally, XBRL helps government agencies gather financial data that are more
p p p p p p p p p p p p p p
consistent, easier to understand, self-checking, and more quickly communicated. Chapter 2
p p p p p p p p p p p
contains more about XBRL, including the idea that the language also enables its users to verify
p p p p p p p p p p p p p p p p
accounting relationships as assets = liabilities + stockholder equity.
p p p p p p p p p
1-5. The questions asked here about suspicious activity reporting (SAR) require
p p p p p p p p p
opinions from students. Regarding the first question, which asks if SAR activity should be a
p p p p p p p p p p p p p p p
legal matter, there is little room for disagreement because so much of SAR is mandated by
p p p p p p p p p p p p p p p p
federal legislation such as the Annunzio-Wylie Anti-Money Laundering Act of 1992, the Bank
p p p p p p p p p p p p p
Secrecy Act of 1996, and the Patriot Act of 2001. Although there are statistics on the number
p p p p p p p p p p p p p p p p p
of SAR filings, less is known about how much of what appears to be suspicious are in fact
p p p p p p p p p p p p p p p p p p
violations of federal statutes.
p p p p
1-6. The example given in the question demonstrates one way in which
p p p p p p p p p p
computerization has refined cost estimation and thus has impacted managerial accounting.
p p p p p p p p p p p
p However, IT has impacted almost every area of managerial accounting (and decision
p p p p p p p p p p p
making). Consider, for example, the emergence of such concepts as just-in-time systems,
p p p p p p p p p p p p
computer integrated manufacturing systems, manufacturing resource planning systems,
p p p p p p p p
SM 1.4 p
