, Chapter 2
Information Technology and AISs
Discussion Questions
2-1. An AIS is best viewed as a set of interacting components that must all work
together to accomplish data gathering, storage, processing, and output tasks. For example,
computer hardware runs software, and each would be "lost" without the other. Similarly,
software must have data to provide useful information. And all these components would be
useless without people and procedures to maintain them, gather them, run them, and use
them properly.
2-2. An understanding of information technology (IT) is important to accountants for
many reasons. Some examples:
a) Much of today's accounting tasks are performed with computers. Thus, it is essential
that the modern accountant possess a basic understanding of a computer's
functions, capabilities, and limitations.
b) Accountants often help clients make hardware and software decisions. Knowledge
of IT concepts is critical to these efforts.
c) Accounting information systems that are computerized must still be audited. It is
impossible to audit such systems without a firm understanding of IT concepts.
d) Accountants are often asked to sit on evaluation committees when changes to
existing accounting systems are contemplated. An understanding of how a computer
operates enables the accountant to participate more intelligently in such committees.
e) Accountants are often asked to assist in the design of new computerized accounting
information systems. Computer technology often plays an important role in this
design work.
f) Most accounting systems require controls to assure the accuracy, timeliness, and
completeness of the information generated by such systems. An understanding of
how computer technology contributes to these objectives, and also how computer
technology can thwart these objectives, enables the accountant to evaluate
computer controls in an automated accounting environment.
g) Those accountants who understand how to use computer hardware and software will
have the easiest time in performing such tasks as auditing, budgeting, database use,
and so forth. Thus, the more accountants understand about information technology,
the easier it is to get hired, noticed, and/or promoted.
h) A great deal of accounting data are gathered, transmitted, processed, and distributed
via the Internet. A fundamental understanding of the information technology that
drives these activities is therefore essential to the accountants that help perform
these activities.
2-3. Data transcription refers to the transformation of data from source documents
into machine-readable "computerized" input. Data transcription is unnecessary in manual
accounting information systems because there is no computer. However, data transcription
is critical to those computerized accounting information systems that collect data with
manually-prepared source documents.
Data entry personnel typically transcribe data by copying them onto computer-readable
media such as CDs, or more commonly, keying data directly into computers (e.g., when a
bank clerk helps a customer make a deposit). Thus, data transcription is usually labor
intensive and therefore costly. Data transcription also has the potential to insert errors into
SM 2.1
,data and/or to delay or “bottle-neck” operations. Designers of effective accounting
information systems are willing to incur such costs because the benefits of the computerized
processing from these systems make them cost-effective. However, data-preparation time
and costs can be saved, and transcription delays avoided, if an AIS gathers data that are
already in machine readable form (e.g., through automatic tag readers, bar codes, or
magnetized-strip cards).
2-4. Computer input equipment includes computer keyboards, computer mouse, bar
code readers, POS devices, MICR readers, OCR readers, magnetic strip readers, and such
specialized microcomputer input devices as computer mice, joysticks, web cams, and
microphones. A growing amount of accounting data is also now input via mobile devices
such as smart phones and PDAs. The chapter describes the functioning of each of these
devices in detail.
2-5. This question asks students to voice their personal opinions about red-light
cameras—the ones that automatically issue traffic tickets when drivers run red lights. This
question should therefore generate lively discussion. Many drivers hate them—for example,
arguing that winter conditions made it difficult to stop or that such systems are more
motivated by ticket revenues than by concerns for safety. Local government officials
typically argue the opposite—i.e., that such systems merely enforce driving laws already on
the books, serve a safety function, and save local residents money by generating revenues
that could otherwise only be raised by other taxes.
2-6. The three components of the central processing unit are: (1) primary memory, (2)
arithmetic/logic unit, and (3) control unit. As its name suggests, the primary memory of the
CPU temporarily stores data and programs for execution purposes. The arithmetic-logic
units of most central processors have special-purpose storage memories called registers
that perform arithmetic operations (such as addition, subtraction, multiplication, division and
exponentiation) and logical operations (such as comparisons and bit-manipulating
functions). Finally, the control sections of central processing units act as an overseer of
operations, interpreting program instructions and supervising their execution.
Microprocessor speeds are measured in megahertz (MHz) or gigahertz (GHz)—the number
of pulses per second of the system’s timing clock. In larger computers, processor speed is
also measured in millions of instructions per second (MIPS) or millions of floating point
operations per second (MFLOPS). Processor speeds are rarely important to accounting
systems because the speed of the processor drastically exceeds the speeds for input and
output operations. Most computers are I/O bound, meaning that their CPUs mostly wait for
data to be input or output.
2-7. The three types of printers mentioned in the text are dot-matrix printers, inkjet
printers, and laser printers.
Dot-matrix printers
a) Advantages: (1) inexpensive, (2) flexible, and (3) able to print on multipart paper (i.e.,
make “carbon copies”)
b) Disadvantages: (1) slow print speeds, (2) low print resolutions
Ink-Jet Printers
a) Advantages: (1) higher print resolutions than most dot-matrix printers, (2) can print
in multiple colors, (3) can print photographic prints, and continuous graphs, (4)
selected models can perform faxing, copying, and scanning functions, and (5)
comparatively inexpensive compared to laser printers
SM 2.2
, b) Disadvantages: (1) lower speeds (compared to laser printers), (2) can print single
copies only (not carbon copies), and (3) ink cartridges are comparatively expensive
Laser Printers
a) Advantages: (1) high output quality, (2) fastest print speeds, (3) selected models can
perform faxing, copying, and scanning functions
b) Disadvantages: (1) comparatively higher costs for both printers and toner cartridges,
and (2) can print single copies only
2-8. Secondary storage devices provide a permanent, non-volatile medium for storing
and retrieving accounting data. Examples include permanent hard disks, removable disks
such as zip disks, CD-ROM disks, DVDs, flash (USB) drives, cartridge tape, and flash
memory sticks (e.g., the type used in cameras). Secondary storage is important to AISs
because the primary memory of a computer is too small and too volatile to meet the
permanent-storage requirements of the typical accounting information system. In addition,
such secondary storage media as CD-ROMs and USB devices are removable and therefore
useful for backup, mailing, and distribution tasks. These media and their relative advantages
and disadvantages are described at length in the chapter.
2-9. Image processing refers to storing graphic images in computer files (usually of
business documents) and manipulating them electronically. Examples of image processing
applications mentioned in the text include: insurance companies (storing claims forms and
accident reports), banks (storing check images), hospitals (storing medical diagnostic
scans), and the IRS (storing tax returns data). Other examples include catalog applications
(storing merchandise images), personnel applications (storing employee pictures), and legal
applications (storing mortgages, deeds, wills and other legal documents). Four advantages
of image processing that are important to AISs are: (1) fast data capture, (2) archiving
efficiency (the ability to store hundreds of thousands of documents on a small medium), (3)
processing convenience (the ability to retrieve, catalog, sort, or otherwise organize images
quickly and efficiently), and (4) accessibility (the ability to provide the same images to
several users at once). This last, file-sharing advantage is also important for collaborative
tasks in professional offices.
2-10. Data communications protocols are the standards by which computer devices
communicate with one another. Examples of such standards include the packet size and
format, the transmission rate, the duplex setting, the type of transmission (synchronous
versus asynchronous), and the type of parity used (odd, even, or none). Communication
protocols are important because they enable computers to transmit digital data over different
types of communications media, and also to interpret data after the transmission takes
place. For instance, if the parity bit for a character were different than the parity bit at the
time it was transmitted, the character would either be different or unreadable.
2-11. Local Area Networks (LANs) are collections of computers, file servers, printers,
and similar devices that are all located in a small area (e.g., the same building), and that are
all connected to one another for communications purposes. The advantages of LANs are
described in the chapter, and include: (1) ability to facilitate communication among LAN
members, and between LAN members and the Internet, (2) sharing computer equipment,
(3) sharing computer files, (4) saving software costs, and (5) enabling unlike computer
equipment to communicate with one another.
2-12. Client/server computing is an alternate to mainframe/host computing. In
centralized computing systems, the mainframe computer or minicomputer performs most, if
not all, of the processing and database tasks, which are also mostly centralized. In
SM 2.3
Information Technology and AISs
Discussion Questions
2-1. An AIS is best viewed as a set of interacting components that must all work
together to accomplish data gathering, storage, processing, and output tasks. For example,
computer hardware runs software, and each would be "lost" without the other. Similarly,
software must have data to provide useful information. And all these components would be
useless without people and procedures to maintain them, gather them, run them, and use
them properly.
2-2. An understanding of information technology (IT) is important to accountants for
many reasons. Some examples:
a) Much of today's accounting tasks are performed with computers. Thus, it is essential
that the modern accountant possess a basic understanding of a computer's
functions, capabilities, and limitations.
b) Accountants often help clients make hardware and software decisions. Knowledge
of IT concepts is critical to these efforts.
c) Accounting information systems that are computerized must still be audited. It is
impossible to audit such systems without a firm understanding of IT concepts.
d) Accountants are often asked to sit on evaluation committees when changes to
existing accounting systems are contemplated. An understanding of how a computer
operates enables the accountant to participate more intelligently in such committees.
e) Accountants are often asked to assist in the design of new computerized accounting
information systems. Computer technology often plays an important role in this
design work.
f) Most accounting systems require controls to assure the accuracy, timeliness, and
completeness of the information generated by such systems. An understanding of
how computer technology contributes to these objectives, and also how computer
technology can thwart these objectives, enables the accountant to evaluate
computer controls in an automated accounting environment.
g) Those accountants who understand how to use computer hardware and software will
have the easiest time in performing such tasks as auditing, budgeting, database use,
and so forth. Thus, the more accountants understand about information technology,
the easier it is to get hired, noticed, and/or promoted.
h) A great deal of accounting data are gathered, transmitted, processed, and distributed
via the Internet. A fundamental understanding of the information technology that
drives these activities is therefore essential to the accountants that help perform
these activities.
2-3. Data transcription refers to the transformation of data from source documents
into machine-readable "computerized" input. Data transcription is unnecessary in manual
accounting information systems because there is no computer. However, data transcription
is critical to those computerized accounting information systems that collect data with
manually-prepared source documents.
Data entry personnel typically transcribe data by copying them onto computer-readable
media such as CDs, or more commonly, keying data directly into computers (e.g., when a
bank clerk helps a customer make a deposit). Thus, data transcription is usually labor
intensive and therefore costly. Data transcription also has the potential to insert errors into
SM 2.1
,data and/or to delay or “bottle-neck” operations. Designers of effective accounting
information systems are willing to incur such costs because the benefits of the computerized
processing from these systems make them cost-effective. However, data-preparation time
and costs can be saved, and transcription delays avoided, if an AIS gathers data that are
already in machine readable form (e.g., through automatic tag readers, bar codes, or
magnetized-strip cards).
2-4. Computer input equipment includes computer keyboards, computer mouse, bar
code readers, POS devices, MICR readers, OCR readers, magnetic strip readers, and such
specialized microcomputer input devices as computer mice, joysticks, web cams, and
microphones. A growing amount of accounting data is also now input via mobile devices
such as smart phones and PDAs. The chapter describes the functioning of each of these
devices in detail.
2-5. This question asks students to voice their personal opinions about red-light
cameras—the ones that automatically issue traffic tickets when drivers run red lights. This
question should therefore generate lively discussion. Many drivers hate them—for example,
arguing that winter conditions made it difficult to stop or that such systems are more
motivated by ticket revenues than by concerns for safety. Local government officials
typically argue the opposite—i.e., that such systems merely enforce driving laws already on
the books, serve a safety function, and save local residents money by generating revenues
that could otherwise only be raised by other taxes.
2-6. The three components of the central processing unit are: (1) primary memory, (2)
arithmetic/logic unit, and (3) control unit. As its name suggests, the primary memory of the
CPU temporarily stores data and programs for execution purposes. The arithmetic-logic
units of most central processors have special-purpose storage memories called registers
that perform arithmetic operations (such as addition, subtraction, multiplication, division and
exponentiation) and logical operations (such as comparisons and bit-manipulating
functions). Finally, the control sections of central processing units act as an overseer of
operations, interpreting program instructions and supervising their execution.
Microprocessor speeds are measured in megahertz (MHz) or gigahertz (GHz)—the number
of pulses per second of the system’s timing clock. In larger computers, processor speed is
also measured in millions of instructions per second (MIPS) or millions of floating point
operations per second (MFLOPS). Processor speeds are rarely important to accounting
systems because the speed of the processor drastically exceeds the speeds for input and
output operations. Most computers are I/O bound, meaning that their CPUs mostly wait for
data to be input or output.
2-7. The three types of printers mentioned in the text are dot-matrix printers, inkjet
printers, and laser printers.
Dot-matrix printers
a) Advantages: (1) inexpensive, (2) flexible, and (3) able to print on multipart paper (i.e.,
make “carbon copies”)
b) Disadvantages: (1) slow print speeds, (2) low print resolutions
Ink-Jet Printers
a) Advantages: (1) higher print resolutions than most dot-matrix printers, (2) can print
in multiple colors, (3) can print photographic prints, and continuous graphs, (4)
selected models can perform faxing, copying, and scanning functions, and (5)
comparatively inexpensive compared to laser printers
SM 2.2
, b) Disadvantages: (1) lower speeds (compared to laser printers), (2) can print single
copies only (not carbon copies), and (3) ink cartridges are comparatively expensive
Laser Printers
a) Advantages: (1) high output quality, (2) fastest print speeds, (3) selected models can
perform faxing, copying, and scanning functions
b) Disadvantages: (1) comparatively higher costs for both printers and toner cartridges,
and (2) can print single copies only
2-8. Secondary storage devices provide a permanent, non-volatile medium for storing
and retrieving accounting data. Examples include permanent hard disks, removable disks
such as zip disks, CD-ROM disks, DVDs, flash (USB) drives, cartridge tape, and flash
memory sticks (e.g., the type used in cameras). Secondary storage is important to AISs
because the primary memory of a computer is too small and too volatile to meet the
permanent-storage requirements of the typical accounting information system. In addition,
such secondary storage media as CD-ROMs and USB devices are removable and therefore
useful for backup, mailing, and distribution tasks. These media and their relative advantages
and disadvantages are described at length in the chapter.
2-9. Image processing refers to storing graphic images in computer files (usually of
business documents) and manipulating them electronically. Examples of image processing
applications mentioned in the text include: insurance companies (storing claims forms and
accident reports), banks (storing check images), hospitals (storing medical diagnostic
scans), and the IRS (storing tax returns data). Other examples include catalog applications
(storing merchandise images), personnel applications (storing employee pictures), and legal
applications (storing mortgages, deeds, wills and other legal documents). Four advantages
of image processing that are important to AISs are: (1) fast data capture, (2) archiving
efficiency (the ability to store hundreds of thousands of documents on a small medium), (3)
processing convenience (the ability to retrieve, catalog, sort, or otherwise organize images
quickly and efficiently), and (4) accessibility (the ability to provide the same images to
several users at once). This last, file-sharing advantage is also important for collaborative
tasks in professional offices.
2-10. Data communications protocols are the standards by which computer devices
communicate with one another. Examples of such standards include the packet size and
format, the transmission rate, the duplex setting, the type of transmission (synchronous
versus asynchronous), and the type of parity used (odd, even, or none). Communication
protocols are important because they enable computers to transmit digital data over different
types of communications media, and also to interpret data after the transmission takes
place. For instance, if the parity bit for a character were different than the parity bit at the
time it was transmitted, the character would either be different or unreadable.
2-11. Local Area Networks (LANs) are collections of computers, file servers, printers,
and similar devices that are all located in a small area (e.g., the same building), and that are
all connected to one another for communications purposes. The advantages of LANs are
described in the chapter, and include: (1) ability to facilitate communication among LAN
members, and between LAN members and the Internet, (2) sharing computer equipment,
(3) sharing computer files, (4) saving software costs, and (5) enabling unlike computer
equipment to communicate with one another.
2-12. Client/server computing is an alternate to mainframe/host computing. In
centralized computing systems, the mainframe computer or minicomputer performs most, if
not all, of the processing and database tasks, which are also mostly centralized. In
SM 2.3
