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Core Concepts of Accounting Information Systems, 13th Edition, by Simkin, Rose, and Norman
SM 2.1
Chapter 2
ACCOUNTING ON THE INTERNET
Discussion Questions
2-1. An intranet is an internal network created by an organization for the benefit of its
employees. Most intranets are local area networks that utilize convenient web-browsing
Both intranets and extranets are valuable to accountants. For example, intranets enable
businesses to distribute, and end users to read, information about such items as production
are important auditing concerns.
2-2. The term “blogs” is an abbreviation for web logs, and is a groupware
companies, government organizations, and universities.
2-3. As of June, 2014, Bitcoin was still a viable currency that was trading at $444.80
2-4. Commentary on social media sites such as Facebook or Twitter also contains
useful information to businesses. For example, an automobile manufacturer might check
According to a recent survey of 2,100 companies by researchers at Harvard University,
nearly 80% of survey respondents use, or plan to use, social media for business purposes,
accounting firms.
2-5. Hypertext markup language (html) is a computer programming language that
enables users to create web pages for use on the Internet. Most of the web pages that we
SM 2.2
view on the Internet employ it. If you use Microsoft Internet Explorer, you can view the
HTML is mostly an editing language that tells a web browser how to display the contents of
a web page. But HTML tags cannot be changed or customized. To solve this problem,
language.” As noted in the text, the XBRL International Consortium develops international
standards for this language.
2-6. As explained in question 5 above, XBRL is a standardized subset of XML.
Businesses can use the documents created and saved in XBRL format in many different ways
Commission (SEC), which stores corporate financial data such as 10-k reports in a database
called IDEA—an acronym for “Interactive Data and Electronic Applications.” The
containing XBRL-coded, financial information.
2-7. Electronic commerce (EC) means conducting business electronically. Examples
of electronic commerce include retail sales over the Internet and EDI (the ability to
access.
Amazon.com, or E-trade, the percentage is much larger.
2-8. Electronic payments (E-payments) are payments that customers make to sellers
electronically. They are similar to credit card payments except that they use third parties. It
SM 2.3
card or account. One advantage of using such a system is that buyers need only provide their
2-9. Electronic data interchange (EDI) refers to transmitting routine business
documents such as shipping notices, customs forms, invoices, and purchase orders
eliminates data-entry bottlenecks and reduces the errors such data transcription typically
introduces into an AIS. Other advantages of EDI discussed in the chapter are: (1)
2-10. This question asks students how comfortable they are giving their credit card
theft, in which someone steals the identity of another, is easy when the thief knows such
2-11. A common way for the owners of one website to charge for advertising from a
second party is to charge a set fee (for example, $1) each time a viewer clicks on the
lead to sales, while the website owner benefits from the inflated billing revenues.
California as well as the Computer Misuse Act 1990 in the United Kingdom. Several arrests
have been made relating to click fraud.
and private vandals, who randomly target a particular company.
SM 2.4
2-12. Spamming is the act of sending unsolicited emails to a large number of
accounts—usually for advertising purposes. Spam is also a growing problem in instant-
estimated that spamming costs the U.S. more than $13 billion in lost time and productivity.
Spammers often attempt to pay ISPs for their data transmissions with stolen credit cards—an
added cost.
of fraud. Who has not gotten an unsolicited email from an African country, offering to share
millions of dollars in exchange for the recipient’s help in the U.S. and of course some
required by the Internet.
Although students may argue that all spamming should be illegal, there are several counter
extensive (and fascinating) discussion of spam at
http://en.wikipedia.org/wiki/Spam_(electronic).
2-13. A firewall is an electronic barrier that limits access to corporate intranets or local
area networks to bona fide users. Some firewalls are separate hardware systems while others
As noted in the text, firewalls are themselves limited in what they can do. For example, they
cannot guard against certain forms of hacking such as spoofing—i.e., a hacker who uses a
A proxy server is a computer and related software that acts as a gateway between internal
corporate users and the Internet. One of the primary security functions of a proxy server is to
2-14. Data encryption refers to transforming original, plaintext data into scrambled,
cyphertext messages that cannot be understood even if it is intercepted during data
SM 2.5
Secret key encryption relies upon a shared algorithm and an encryption key that must be kept
2-15. The three levels of authentication are (1) what you have, (2) what you know, and
(3) who you are. An example of “what you have” is a driver’s license with your picture on it.
require all three.
Instructors are encouraged to ask students about different situations in which they had to use
“who they are.”
2-16. A digital signature is an electronic attachment that verifies and authenticates a
signature is to assure the recipient that the document itself is legitimate and faithfully
2-17. Commerce is booming on the Internet, and most (but certainly not all) businesses
have been able to boost both sales and profits as a result. Will all businesses do well? This
is unlikely. However, the chapter notes that selling products and services on the Internet
enables businesses to reach wider audiences, stay open around the clock, and maintain up-to-
ongoing costs of routine maintenance. Thus, most businesses must weigh the cost of
building and maintaining a web presence against the additional revenues that such business
generates. It is not a given that revenues will always offset costs.
wealth of information and alternate sources for common goods and services.
Core Concepts of Accounting Information Systems, 13th Edition, by Simkin, Rose, and Norman
SM 2.6
reduce its accounting expenses (see Problems 2-20 and 2-21). Similar comments apply to
firms that expand sales by accepting e-payments or reducing costs by expanding their e-
business or EDI capabilities.
Problems
2-18. Acronyms:
2-19. Depending on the sources of information used, the students may have a variety of
different points about the advantages and disadvantages of implementing an intranet in the
local company. Some of the main points that you would include in your “talking paper” are:
Disadvantages:
to abuse
Cloud computing companies may offer cheaper and better alternatives
Core Concepts of Accounting Information Systems, 13th Edition, by Simkin, Rose, and Norman
SM 2.7
Advantages:
the company
The data stored on an intranet can be made secure so that proprietary data and
information are only accessed by authorized users
across the entire company
Intranets can be scalable (i.e., can grow with the organization and/or its informational
needs)
Companies can frequently justify the cost of an intranet by quantifying some savings
in operating costs (publish HR manuals, employee manuals, and other company
2-20. This problem requires students to create their own HTML documents, using the
2-21. This problem requires students to log onto EDGAR and access the information
Filers.” Instructors may get best use of this question if they require each student to obtain the
financial information of a different company.
2-22. This problem requires students to log onto the XBRL home page and then (a)
improved business processes, (2) improved communications, and (3) enhanced business
reporting through standardized tags.
2-23. This problem requires students to write a one page report on each of the items
