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Core Concepts of Accounting Information Systems, 13th Edition, by Simkin, Rose, and Norman
SM 1.1
Chapter 1
ACCOUNTING INFORMATION SYSTEMS AND THE ACCOUNTANT
Discussion Questions
1-1. The answer to this question will vary with each university’s location. However, it is
knowledge workers reflect a trend.
1-2. This question is designed to encourage students to think about some of the
information reporting limitations imposed by the traditional accounting general ledger
transactions may be included in an annual report outside the financial statements. The
management letters and footnotes in annual reports may reveal more about a company’s future
prospects than the financial statements themselves.
a particular company. Investors may wish to have more information available to them but the
downside is that too much information can be just as problematic as too little information.
1-3. The financial accounting systems we have known for more than 500 years are
changing dramatically as a result of advances in information technology and financial accounting
that financial reporting will undergo tremendous change in the next few years as we learn to use
technology more effectively in the design of financial AISs.
sophisticated analyses of important business functions. For instance, sales can be examined at
many different levels and organized according to criteria such as geography, customer, product,
Core Concepts of Accounting Information Systems, 13th Edition, by Simkin, Rose, and Norman
SM 1.2
working at home these days, “digital commuting” may be another trend.
1-4. The objective of a company’s financial statements is to communicate relevant
financial information to such external parties as stockholders, investors, and government
of the reports. Finally, XBRL also helps government agencies gather financial data that are more
consistent, easier to understand, self-checking, and more quickly communicated. Chapter 14
1-5. The questions asked here about suspicious activity reporting (SAR) require opinions
1996, and the Patriot Act of 2001. Although statistics on the number of SAR filings, less is
statutes.
1-6. The example given in the question demonstrates one way in which computerization
has refined cost estimation and thus has impacted managerial accounting. However, IT has
budgeting are other areas of managerial accounting affected by advances in technology, as are
the many applications of spreadsheet software, decision support systems, and expert systems.
Colorado State University, San Jose State University, and others. For example, the University of
Denver adapted a version of the Balanced Scorecard to evaluate their Student Life Assessment
1-7. The AICPA website lists hundreds of potential assurance services for CPAs to offer.
These include productivity improvement, cost analysis, benchmarking, internal auditing quality
SM 1.3
Skepticism and integrity, for example, are two characteristics typically associated with public
accountants.
consulting. But the industry shake-up in 2002 may also prompt some accounting firms to scale
back services and focus on only their auditing business.
1-8. This question asks students to interview auditors from professional service firms and
additional discussion about such work.
1-9. Almost every traditional accounting job today requires at least some information
systems skills. In addition, there are many job opportunities that require combined skills in both
planning, preparation, and consulting are yet other areas.
develop and enhance its information systems. Their lack of accounting skills may lead their
employer to install information systems that fail to meet their needs.
1-10. Employers of both accounting and IS personnel often rank “analytical reasoning” and
“writing” skills on the same priority as technical skills, and some rank them even higher. Said
Another recruiter said it slightly differently: “Give me a technically-competent accounting or IS
student who can perform AIS tasks well, and I will pay them X dollars. Give me a student who
SM 1.4
2X dollars.”
There are several other attributes beyond “analytical thinking” and “writing” skills that many
correct. Finally, there is “selflessness”—the willingness to sacrifice personal goals, ego, and
time in order to finish important organizational and professional projects.
1-11. This is a growing field of career opportunities for accounting majors that should not
A July 2012 White Paper by IT@Intel (Mining Big Data in the Enterprise for Better Business
Intelligence by Fania and Miller), notes that one of the biggest challenges in big data is
Predictive Analytics jobs are available literally anywhere in the US from NYC to Columbus, OH
to Seattle, WA – and many international opportunities. And the firms include Walmart, Bank of
America, healthcare firms, universities, insurance companies and the Big-4 public accounting
firms. For more information: http://predictiveanalyticsjobs.org.
Degrees/courses to prepare for these types of jobs are usually called an MS in Analytics or
Business Analytics. (http://analytics.ncsu.edu/?page_id=4184). At this site, you can click on any
business disciplines.
For salary information, this site is very helpful: http://analytics.ncsu.edu/?page_id=248
Core Concepts of Accounting Information Systems, 13th Edition, by Simkin, Rose, and Norman
SM 1.5
Problems
1-12.
n. IT information technology
o. KPI key performance indicator
p. OSC Operation Safe Commerce
Act
r. REA resources, events, and agents
s. SAR suspicious activity reporting
1-13. The number of articles in professional accounting journals that relate to information
accountants. Several now have separate “Technology” columns or sections devoted to IS topics
1-14. This problem focuses on the human side of organizations—especially ways that
employees might devise to “beat the system.” This problem is therefore especially useful in
SM 1.6
(which can result in an infinite return on investment once all the organization's assets
have been fully depreciated). Where net profit is used in the calculation, Shervonne's
comment about including allocated overhead in deriving profit, is another argument
against using return on investment.
employee complaints, or (8) employee turnover.
b. Accounting numbers can frequently lead to dysfunctional behavior if their limitations are
not universally understood. For example, if the incentives are large enough or the
penalties for underperformance are harsh enough, managers might be tempted to record
adjusted for overhead allocations and current asset values might be a good measure when
used in conjunction with other measures.
c. This part of the problem requires Internet research. However, “residual income” might
inside the front door!
1-15. The idea behind Mr. Zucker’s observation is that many companies now make less
money in the digital age than they did in the analog age. This is perhaps because items like CD
a. Music company executives are having a difficult time. Music files are small and easily
SM 1.7
b. Consumers of course love it when product prices decrease. But they dislike anything that
restricts their free and liberal use of digital media. After all, they paid for it and feel they
c. TV executives appear to both appreciate and dislike the new reality of the digital age.
Digital media makes TV programming easier and cheaper, but decreases the income
tape and disk sales.
1-16. This problem requires students to find out “what’s new” in the field of AIS now, and
1-17. Instructors might want to mention that this problem asks students to consider the
accounting information needs of a subset of not-for-profit organizations, and to note that the
a. Examples of the financial information gathered and maintained by such groups include
data on dues payments, revenues from such club activities as bake sales, rummage sales
student scholarships, and travel reimbursements.
b. Hopefully, students will realize that they are talking about manual accounting
government agencies.
c. Most recreational clubs have only a single “treasurer” to look after the financial matters
and, for example, the same person who spends the money writes the checks for it, most
club members do not concern themselves with the financial details of the club, and
