Accounting Information Systems
SOLUTION MANUAL
All Chapters Included
Accounting Information
Systems
15th Edition
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
, Accounting Information Systems
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 exceededits benefits? If so, provide some examples.
If not, why?
Most organizations produce information only if its valueexceeds 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 ofits 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
forfinancial reporting.
1.2 Can the characteristics of useful information listed inTable 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
3-2
, Accounting Information Systems
also likely to be more relevant. Verifiable informationis likely to be
more accurate.
However, achieving one objective may require sacrificinganother. For
example, ensuring that information is morecomplete may reduce its
timeliness. Similarly, increased verifiability and accuracy may reduce
its timeliness.
The decision maker must decide which trade-offs arewarranted
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 newmobile
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 tomake them, and the
business processes you will need to engage in.
b. Your company will need to exchange information withvarious
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:
3-3
, Accounting Information Systems
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 toeach 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 motivatedto do a good job, as they
will be presenting to their peers.
The value of this activity is not in arriving at a
3-4
SOLUTION MANUAL
All Chapters Included
Accounting Information
Systems
15th Edition
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
, Accounting Information Systems
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 exceededits benefits? If so, provide some examples.
If not, why?
Most organizations produce information only if its valueexceeds 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 ofits 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
forfinancial reporting.
1.2 Can the characteristics of useful information listed inTable 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
3-2
, Accounting Information Systems
also likely to be more relevant. Verifiable informationis likely to be
more accurate.
However, achieving one objective may require sacrificinganother. For
example, ensuring that information is morecomplete may reduce its
timeliness. Similarly, increased verifiability and accuracy may reduce
its timeliness.
The decision maker must decide which trade-offs arewarranted
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 newmobile
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 tomake them, and the
business processes you will need to engage in.
b. Your company will need to exchange information withvarious
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:
3-3
, Accounting Information Systems
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 toeach 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 motivatedto do a good job, as they
will be presenting to their peers.
The value of this activity is not in arriving at a
3-4
