Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
CHAPTER 2
OVERVIEW OF TRANSACTION PROCESSING
AND ENTERPRISE RESOURCE PLANNING SYSTEMS
SUGGESTED ANSWERS TO DISCUSSION QUESTIONS
2.1 Table 2-1 lists some of the documents used in the revenue, expenditure, and human
resources cycle. What kinds of input or output documents or forms would you find in
the production (also referred to as the conversion cycle)?
Students will not know the names of the documents but they should be able to identify the
tasks about which information needs to be gathered. Here are some of those tasks
Requests for items to be produced
Documents to plan production
Schedule of items to be produced
2-1
©2018 Pearson Education, Inc.
Ch. 2: Overview of Business Processes
2.2 With respect to the data processing cycle, explain the phrase “garbage in, garbage
out.” How can you prevent this from happening?
When garbage, defined as errors, is allowed into a system that error is processed and the
resultant data stored. The stored data at some point will become output. Thus, the phrase
garbage in, garbage out. Data errors are even more problematic in ERP systems because the
error can affect many more applications than an error in a non-integrated database.
Companies go to great lengths to make sure that errors are not entered into a system. To
prevent data input errors:
Data captured on source documents and keyed into the system are edited by the
Companies use turnaround documents to avoid the keying process.
Companies use source data automation devices to capture data electronically to avoid
Well-designed documents and screens improve accuracy and completeness by
Data input screens are preformatted to list all the data the user needs to enter.
2-2
©2018 Pearson Education, Inc.
Accounting Information Systems
2.3 What kinds of documents are most likely to be turnaround documents? Do an
internet search to find the answer and to find example turnaround documents.
Documents that are commonly used as turnaround documents include the following:
Utility bills
Meter cards for collecting readings from gas meters, photocopiers, water meters etc
2-3
©2018 Pearson Education, Inc.
Ch. 2: Overview of Business Processes
2.4 The data processing cycle in Figure 2-1 is an example of a basic process found
throughout nature. Relate the basic input/process/store/output model to the functions
of the human body.
There are a number of ways to relate the input/process/store/output model to the human
body. Here are a few of them
Brain. We read, see, hear, and feel things. We process that input in order to understand
2.5 Some individuals argue that accountants should focus on producing financial
statements and leave the design and production of managerial reports to information
systems specialists. What are the advantages and disadvantages of following this
advice? To what extent should accountants be involved in producing reports that
include more than just financial measures of performance? Why?
There are no advantages to accountants focusing only on financial information. Both the
accountant and the organization would suffer if this occurred. Moreover, it would be very
2-4
©2018 Pearson Education, Inc.
Accounting Information Systems
SUGGESTED ANSWERS TO THE PROBLEMS
2.1 The chart of accounts must be tailored to an organization’s specific needs. Discuss
how the chart of accounts for the following organizations would differ from the one
presented for S&S in Table 2-4.
Some of the changes in the chart of accounts for each type of entity include the following:
a. University
No equity or summary drawing accounts. Instead, have a fund balances section
for each type of fund.
Several types of funds, with a separate chart of accounts for each. The current
b. Bank
Loans to customers would be an asset, some current others noncurrent, depending
upon the length of the loan.
c. Government Unit
No equity or summary drawing accounts. Instead, have fund balances.
2-5
©2018 Pearson Education, Inc.
Ch. 2: Overview of Business Processes
d. Manufacturing Company
Several types of inventory accounts (raw materials, work-in-process, and finished
e. Expansion of S&S
Additional digits to code:
2-6
©2018 Pearson Education, Inc.
Accounting Information Systems
2.2 Design a chart of accounts for SDC. Explain how you structured the chart of accounts
to meet the company’s needs and operating characteristics. Keep total account code
length to a minimum, while still satisfying all of Mace’s desires.
(Adapted from the CMA Exam)
A six-digit code (represented by letters ABCDEF) is sufficient to meet SDC’s needs:
A This digit identifies the 4 divisions plus the corporate office
B This digit represents major account types (asset, liability, equity, revenue,
2-7
©2018 Pearson Education, Inc.
Ch. 2: Overview of Business Processes
2.3 An audit trail enables a person to trace a source document to its ultimate effect on the
financial statements or work back from amounts in the financial statements to source
documents. Describe in detail the audit trail for the following:
a. The audit trail for inventory purchases includes linking purchase requisitions, purchase
orders, and receiving reports to vendor invoices for payment. All these documents
would be linked to the check or EFT transaction used to pay for an invoice and
recorded in the Cash Disbursements Journal. In addition, these documents would all be
2-8
©2018 Pearson Education, Inc.
Payment
Financial
Statements
Trial
Balance
Purchase
Requisition
General
Ledger
Cash
Disbursements Journal
Accounting Information Systems
b. The audit trail for the sale of inventory links the customer order, sales order, and shipping
document to the sales invoice. These documents are linked to the journal entry recording
2-9
©2018 Pearson Education, Inc.
Financial
Statements
Trial
Balance
Ch. 2: Overview of Business Processes
c. The audit trail for employee payroll links records of employee activity (time cards, time
sheets, etc.) to paychecks and to the journal entry to record payment of payroll. In a
2-10
©2018 Pearson Education, Inc.
Financial
Statements
Trial
Balance
