Solution Manual for Accounting Information Systems 15th Edition by Marshall B Romney, Paul J. Steinbart, Scott L. Summers, David A. Wood

Solutions Manual N1




For

Accounting
Information Systems
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15th Edition N1




Marshall B. Romney N1 N1




N1 Paul John N1




Steinbart Scott L.
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N1 Summers David A. N1 N1




N1 Wood



All Chapters Solutions Manual Supplement files download
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link at the end of this file.
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, CHAPTER 1 N1




ACCOUNTING INFORMATION SYSTEMS: AN OVERVIEW N1 N1 N1 N1




SUGGESTED ANSWERS TO DISCUSSION QUESTIONS N1 N1 N1 N1




1.1 The value of information is the difference between the benefits realized from using
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that information and the costs of producing it. Would you, or any organization,
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ever produce information if its expected costs exceeded its benefits? If so, provide
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some examples. If not, why?
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Most organizations produce information only if its value exceeds its cost. However, there are
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two situations where information may be produced even if its cost exceeds its value.
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a. It is often difficult to estimate accurately the value of information and the cost of
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producing it. Therefore, organizations may produce information that they expect
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will produce benefits in excess of its costs, only to be disappointed after the fact.
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b. Production of the information may be mandated by either a government agency or
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a private organization. Examples include the tax reports required by the IRS and
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disclosure requirements for financial reporting.
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1.2 Can the characteristics of useful information listed in Table 1-1 be met
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simultaneously? Or does achieving one mean sacrificing another?
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Several of the criteria in Table 1.1 can be met simultaneously. For example, more
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timely information is also likely to be more relevant. Verifiable information is likely to
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be more accurate.
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However, achieving one objective may require sacrificing another. For example,
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ensuring that information is more complete may reduce its timeliness. Similarly,
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increased verifiability and accuracy may reduce its timeliness.
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The decision maker must decide which trade-offs are warranted in each situation.
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1-1
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,Ch. 1: Accounting Information Systems: An
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Overview

1.3 You and a few of your classmates decided to become entrepreneurs. You came up
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with a great idea for a new mobile phone application that you think will make
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lots of money. Your business plan won second place in a local competition, and
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you are using the $10,000 prize to support yourselves as you start your company.
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a. Identify the key decisions you need to make to be successful entrepreneurs, the
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information you need to make them, and the business processes you will need
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to engage in.
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b. Your company will need to exchange information with various external parties.
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Identify the external parties, and specify the information received from and
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sent to each of them.
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The author turns this question into an in-class group activity.
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groups, told to close their books, and given 15 minutes to:
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a. Think through the business processes, key decisions, and information needs issues
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in their group.
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b. Identify the external users of information and specify the information received from
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and sent to each of them.
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One group is selected to present their answers to the class. The other groups are told
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to challenge the group‘s answers, provide alternative answers, and chip in with additional
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answers not provided by the selected group. Since the group that presents is not
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selected until after the time has expired, students are motivated to do a good job, as
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they will be presenting to their peers.
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The value of this activity is not in arriving at a ―right answer‖ as there are many right
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answers and student answers will vary. Instead, it is in thinking through the issues
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presented in Table 1-2 (business processes, key decisions, and information needs) and
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Figure 1-1 (interactions with external parties). Student answers should contain many of
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the things in Table 1-2 and Figure 1-1 as well as others not shown, as a retail operation
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differs from an application development enterprise.
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The author concludes the exercise by having the students turn to Table 1-2 and Figure 1-
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1 while he emphasizes the need for owners, managers, and employees of organizations to
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identify the information needed to make key decisions in the company‘s business
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processes and the key information interchanges with external parties. All the data
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needed to produce this information must be entered into the AIS, processed, stored,
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protected, and made available to the appropriate users.
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While this active learning activity takes more time than a lecture does, it drives the point
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home much better than a lecture would. It also keeps the students more engaged in
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the material.
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1-2
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, Accounting Information N1


Systems

1.4 How do an organization’s business processes and lines of business affect the
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design of its AIS? Give several examples of how differences among organizations
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are reflected in their AIS.
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An organization‘s AIS must reflect its business processes and its line of business.
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example:
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 Manufacturing companies will need a set of procedures and documents for the
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production cycle; non-manufacturing companies do not.
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 Government agencies need procedures to track separately all inflows and outflows
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from various funds, to ensure that legal requirements about the use of specific
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funds are followed.
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 Financial institutions do not need extensive inventory control systems.
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 Passenger service companies (e.g., airlines, bus, and trains) generally receive
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payments in advance of providing services. Therefore, extensive billing and
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accounts receivable procedures are not needed; instead, they must develop
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procedures to account for prepaid revenue.
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 Construction firms typically receive payments at regular intervals, based on the
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percentage of work completed. Thus, their revenue cycles must be designed to
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track carefully all work performed and the amount of work remaining to be done.
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 Service companies (e.g., public accounting and law firms) do not sell physical goods
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and, therefore, do not need inventory control systems. They must develop and
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maintain detailed records of the work performed for each customer to provide
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backup for the amounts billed. Tracking individual employee time is especially
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important for these firms because labor is the major cost component.
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1.5 Figure 1-5 shows that organizational culture and the design of an AIS influence one
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another. What does this imply about the degree to which an innovative system
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developed by one company can be transferred to another company?
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Since people are one of the basic components of any system, it will always be difficult
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to transfer successfully a specific information systems design intact to another
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organization. Considering in advance how aspects of the new organizational culture are
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likely to affect acceptance of the system can increase the chances for successful transfer.
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Doing so may enable the organization to take steps to mitigate likely causes of
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resistance. The design of an AIS, however, itself can influence and change an
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organization‘s culture and philosophy. Therefore, with adequate top management support,
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implementation of a new AIS can be used as a vehicle to change an organization. The
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reciprocal effects of technology and organizational culture on one another, however, mean
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that it is unrealistic to expect that the introduction of a new AIS will produce the same
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results observed in another organization.
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1-3
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