TEST BANK
, ACCOUNTING INFORMATION SYSTEMS A PRACTIONER
EMPHASIS 7TH EDITION BY CYNTHIA HEAGEY, CONTANCE
LEHHMANN SOLUTIONS MANUAL
Chapter 1
Significance of Accounting Information Systems and the
Accountant’s Role
INTRODUCTORY SCENARIO: SUGGESTED SOLUTIONS TO QUESTIONS
1. Employee overtime hours, customer information (e.g., age groups), inventory levels, reorder points, EOQ
calculation, volume/quantity discount analysis, square footage in use v. storage, customer flow data,
spoilage
2. How much is client willing to pay? System that is easy for servers to use with proper controls. Bob’s hourly
rate would be a concern for client. Will Bob be around “after the sale” (i.e., tech support)? What types of
pre-packaged systems are available?
3. Information to help with software division (e.g., total sales dollars, complexity of accounting system). How
many computers needed? Any expansion planned? What types of employees do they have (e.g., waiters
would want quick touch screens)?
4 The owner of the restaurant wants a new accounting system because he needs up-to-date information on
how the business is doing. Waiting until the end of the year, or even the quarter, does not give Marshall the
information he needs to make those day-to-day decisions that will ensure the success of his restaurant.
CHAPTER VIGNETTES: SUGGESTED RESPONSES TO QUESTIONS
Vignette 1.1
1. Closer relationships with remaining suppliers, the ability to carry less inventory (reducing carrying costs
and risks of theft or loss of inventory), sharing of planning information with suppliers, easier to monitor
vendor performance. Might lose volume discounts if trying to minimize inventory on hand by having
smaller shipments from vendors shipped more often.
2. Reduction in paperwork, reduction in input errors, ordering and cash receipt processes more efficient,
increases in efficiency in meeting changes in demand. One disadvantage would relate to problems with
settling disputed orders or payments with loss of “paper trail” that includes authorized signatures.
Vignette 1.2
1. Managers would probably find information in units to be most useful for planning decisions because this
information would represent things over which he/she has control. While the manager might not have
control over salaries, he/she does have control over the amount of overtime and the approval of vacation of
the employees.
2. Managers would probably want information related to production numbers (to determine seasonality;
during slow times, more employees could be on vacation), the number of vacation hours per employee, the
number of overtime hours per employee, backorder information, and information to help the manager
match staffing levels with production.
Vignette 1.3
TEST BANK
,1. The privacy of information is a major consideration, as the customer might not want their spending pattern
information shared with other parties. Loss of confidential information can be disastrous to a company’s
reputation and lead to significant financial losses (lost sales, fines, etc.) Information about customers must
be protected from information leakage to other third parties who gain authorized (or unauthorized) access
TEST BANK
, to information. At the very least, confidential information about the customers should be encrypted and
have limited access.
2. Inventory management (e.g., turnover, obsolescence, supply/demand, reorder levels), potential markets or
product lines for expansion, frequent buyer programs.
Vignette 1.4
1. The situation could have been avoided if employees had been part of the decision-making and testing early
in the project. Employee buy-in is essential to the success of any new system implementation. It is key that
the system provide managers with information that they need for decision-making. It is also important to
have a maintenance contract in place, with better reporting to management and regular follow-up. It
appears that this decision was not made by executive management, so its success was questionable since
the “tone at the top” with regard to the project was “ignorance”. Since executive management did not
monitor the project, they could not respond to Kluger’s complaints, nor could they provide “strong
encouragement” for continuation of the project originally started by Lehmann. In fact, it appears that
executive management was not involved in the decision to take on the new system. Kluger was not given
the opportunity to learn the new system, nor was there motivation to learn the new system. The company
also had inadequate backup so that the project could continue in the absence of a key employee.
2. .Here are some suggested “next steps”
Improve the governance process and the “tone at the top” to get executive management involvement and
oversight of system projects—this includes aligning any system projects with the strategy of the company
Determine that any system chosen by management will provide quality information useful for decision-
making at all levels
Reinstate the maintenance contract and set up a training contract if it is determined more cost-effective and
in line with the company business plan to use the new system
Provide training and employee involvement in developing the system
Provide better oversight of the controller function
Vignette 1.5
1. The redesign process can be improved using the following suggestions:
Set up end-user groups to get input regarding output needs, data collection needs, screen, and form layouts
Develop a schedule of tests to be conducted with representative end users for pilot testing
Allow end user input for changes and improvements to system
Set up training for all affected employees
Get management and programmer buy-in for essential controls and audit trails at the front end of
development
Emphasize the importance of controls, protection of information assets, and protection of
confidential/private information
SOLUTIONS TO DISCUSSION QUESTIONS AND PROBLEMS
1. The project that Finkelstein and Associates is considering is a capital investment that requires information
on the estimated initial investment and the estimated future return. The future return would be measured by
net incremental cash flows to the mall (incremental cash inflows less incremental cash outflows).
Estimated initial investment would include:
• Architects fees
• Renovation of existing facilities
• Construction of new facilities and food court
• Cost of disruption of trade during project
TEST BANK
, ACCOUNTING INFORMATION SYSTEMS A PRACTIONER
EMPHASIS 7TH EDITION BY CYNTHIA HEAGEY, CONTANCE
LEHHMANN SOLUTIONS MANUAL
Chapter 1
Significance of Accounting Information Systems and the
Accountant’s Role
INTRODUCTORY SCENARIO: SUGGESTED SOLUTIONS TO QUESTIONS
1. Employee overtime hours, customer information (e.g., age groups), inventory levels, reorder points, EOQ
calculation, volume/quantity discount analysis, square footage in use v. storage, customer flow data,
spoilage
2. How much is client willing to pay? System that is easy for servers to use with proper controls. Bob’s hourly
rate would be a concern for client. Will Bob be around “after the sale” (i.e., tech support)? What types of
pre-packaged systems are available?
3. Information to help with software division (e.g., total sales dollars, complexity of accounting system). How
many computers needed? Any expansion planned? What types of employees do they have (e.g., waiters
would want quick touch screens)?
4 The owner of the restaurant wants a new accounting system because he needs up-to-date information on
how the business is doing. Waiting until the end of the year, or even the quarter, does not give Marshall the
information he needs to make those day-to-day decisions that will ensure the success of his restaurant.
CHAPTER VIGNETTES: SUGGESTED RESPONSES TO QUESTIONS
Vignette 1.1
1. Closer relationships with remaining suppliers, the ability to carry less inventory (reducing carrying costs
and risks of theft or loss of inventory), sharing of planning information with suppliers, easier to monitor
vendor performance. Might lose volume discounts if trying to minimize inventory on hand by having
smaller shipments from vendors shipped more often.
2. Reduction in paperwork, reduction in input errors, ordering and cash receipt processes more efficient,
increases in efficiency in meeting changes in demand. One disadvantage would relate to problems with
settling disputed orders or payments with loss of “paper trail” that includes authorized signatures.
Vignette 1.2
1. Managers would probably find information in units to be most useful for planning decisions because this
information would represent things over which he/she has control. While the manager might not have
control over salaries, he/she does have control over the amount of overtime and the approval of vacation of
the employees.
2. Managers would probably want information related to production numbers (to determine seasonality;
during slow times, more employees could be on vacation), the number of vacation hours per employee, the
number of overtime hours per employee, backorder information, and information to help the manager
match staffing levels with production.
Vignette 1.3
TEST BANK
,1. The privacy of information is a major consideration, as the customer might not want their spending pattern
information shared with other parties. Loss of confidential information can be disastrous to a company’s
reputation and lead to significant financial losses (lost sales, fines, etc.) Information about customers must
be protected from information leakage to other third parties who gain authorized (or unauthorized) access
TEST BANK
, to information. At the very least, confidential information about the customers should be encrypted and
have limited access.
2. Inventory management (e.g., turnover, obsolescence, supply/demand, reorder levels), potential markets or
product lines for expansion, frequent buyer programs.
Vignette 1.4
1. The situation could have been avoided if employees had been part of the decision-making and testing early
in the project. Employee buy-in is essential to the success of any new system implementation. It is key that
the system provide managers with information that they need for decision-making. It is also important to
have a maintenance contract in place, with better reporting to management and regular follow-up. It
appears that this decision was not made by executive management, so its success was questionable since
the “tone at the top” with regard to the project was “ignorance”. Since executive management did not
monitor the project, they could not respond to Kluger’s complaints, nor could they provide “strong
encouragement” for continuation of the project originally started by Lehmann. In fact, it appears that
executive management was not involved in the decision to take on the new system. Kluger was not given
the opportunity to learn the new system, nor was there motivation to learn the new system. The company
also had inadequate backup so that the project could continue in the absence of a key employee.
2. .Here are some suggested “next steps”
Improve the governance process and the “tone at the top” to get executive management involvement and
oversight of system projects—this includes aligning any system projects with the strategy of the company
Determine that any system chosen by management will provide quality information useful for decision-
making at all levels
Reinstate the maintenance contract and set up a training contract if it is determined more cost-effective and
in line with the company business plan to use the new system
Provide training and employee involvement in developing the system
Provide better oversight of the controller function
Vignette 1.5
1. The redesign process can be improved using the following suggestions:
Set up end-user groups to get input regarding output needs, data collection needs, screen, and form layouts
Develop a schedule of tests to be conducted with representative end users for pilot testing
Allow end user input for changes and improvements to system
Set up training for all affected employees
Get management and programmer buy-in for essential controls and audit trails at the front end of
development
Emphasize the importance of controls, protection of information assets, and protection of
confidential/private information
SOLUTIONS TO DISCUSSION QUESTIONS AND PROBLEMS
1. The project that Finkelstein and Associates is considering is a capital investment that requires information
on the estimated initial investment and the estimated future return. The future return would be measured by
net incremental cash flows to the mall (incremental cash inflows less incremental cash outflows).
Estimated initial investment would include:
• Architects fees
• Renovation of existing facilities
• Construction of new facilities and food court
• Cost of disruption of trade during project
TEST BANK
