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 exceeded its benefits? If so, provide some examples. If not,
why not?
1.2 Can the characteristics of useful information listed in Table 1-1 be met simultaneously? Or
does achieving one mean sacrificing another?
1.3 You and a few of your classmates decided to become entrepreneurs. You came up with a great idea
for a new mobile 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 to make them, and the business processes you will need to engage
in.
b. Your company will need to exchange information with various 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:
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
to each of them.
1.4 How do an organization’s business processes and lines of business affect the design of its
AIS? Give several examples of how differences among organizations are reflected in their
AIS.
An organization’s AIS must reflect its business processes and its line of business. For example:
• Manufacturing companies will need a set of procedures and documents for the production cycle;
non-manufacturing companies do not.
companies
1.5 Figure 1-4 shows that organizational culture and the design of an AIS influence one another.
What does this imply about the degree to which an innovative system developed by one
company can be transferred to another company?
Since people are one of the basic components of any system, it will always be difficult to transfer
1.6 Figure 1-4 shows that developments in IT affect both an organization’s strategy and the
design of its AIS. How can a company determine whether it is spending too much, too little,
or just enough on IT?
1.7 Apply the value chain concept to S&S. Explain how it would perform the various primary
and support activities.
The value chain classifies business activities into two categories: primary and support.
The five primary activities at S&S:
a. Inbound logistics includes all processes involved in ordering, receiving, and temporarily
1.8 IT enables organizations to easily collect large amounts of information about employees.
Discuss the following issues:
These questions involve traditional economic cost/benefit issues and less well-defined ethical
issues.
a. To what extent should management monitor employees’ e-mail?
b. To what extent should management monitor which websites employees visit?
c. To what extent should management monitor employee performance by, for example,
using software to track keystrokes per hour or some other unit of time? If such
information is collected, how should it be used?
d. Should companies use software to electronically “shred” all traces of e-mail?
e. Under what circumstances and to whom is it appropriate for a company to distribute
information it collects about the people who visit its website?
SUGGESTED ANSWERS TO THE PROBLEMS
1.1 IT is continually changing the nature of accounting and the role of accountants. Write a two-
page report describing what you think the nature of the accounting function and the
accounting information system in a large company will be like in the year 2030.
1.2 Adapted from the CMA Examination
a. Identify and discuss the basic factors of communication that must be considered in
the presentation of the annual report.
b. Discuss the communication problems a corporation faces in preparing the annual
report that result from the diversity of the users being addressed.
statements and accompanying footnotes, and describe how they are helpful to the
users of annual reports.
Other than the financial statements and accompanying footnotes, an annual report provides
information concerning
lead to a rich class discussion. This discussion can be combined with the discussion of part e.
d. Discuss at least two advantages and two disadvantages of stating well-defined
corporate strategies in the annual report.
Stating well-defined corporate strategies in a company’s annual report accomplishes the
following:
Disadvantages:
e. Evaluate the effectiveness of annual reports in fulfilling the information needs of
the following current and potential users: shareholders, creditors, employees,
customers, and financial analysts.
Annual reports fulfill users’ information needs as discussed below.
1. Shareholders. Annual reports meet the statutory requirement that publicly held
f. Annual reports are public and accessible to anyone, including competitors.
Discuss how this affects decisions about what information should be provided in
annual reports.
1.3 The use of IT at USAA
a. Why should USAA collect data on which auto parts are fixed most frequently?
What could it do with this data?
b. Even though USAA offered to waive the deductible, the repair shops still managed
to convince 95% of the owners to replace rather than repair their damaged
windshields. How could USAA use its AIS to persuade more shop owners to
repair rather than replace their windows?
