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Turner/Accounting Information Systems, 2e
Solutions Manual
Chapter 14
Concept Check
1. b
2. c
3. d
4. c
5. b
Discussion Questions
15. (SO 1) How do e-commerce and e-business differ? E-business is a very broad
concept that includes any electronically enabled business process. E-business can
means.
16. (SO 2) What was the original purpose of the network of computers that eventually
became the Internet? The original purpose was to facilitate communication and
sharing of work between universities engaged in research for the Department of
defense.
17. (SO 2) Why was ARPANET designed with many different alternative routes for
network traffic? ARPANET was designed during the height of the Cold War with the
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19. (SO 2) How quickly did Internet usage by the public grow after the Internet was
opened to business transactions in 1994? The public use of the Internet exploded in
growth after it was opened to business transactions. This was especially true in the
1998 to 2001 period.
20. (SO 3) Describe the relationship between national backbone providers, regional
ISPs, and local ISPs? Backbone providers make up the main trunk-lines of the
21. (SO 3) What is the importance of a standard formatting language for Web pages and
a standard addressing system? The standard formatting language for web pages is
22. (SO 4) Which types of costs can be reduced when a company decides to engage in
B2B e-commerce on the Internet? Marketing costs, order processing costs, and
distribution costs can be reduced by engaging in B2C sales.
23. (SO 4) What are the differences between brick and mortar retailers and clicks and
mortar retailers? Brick and mortar refers to retailers that sell in traditional forms in a
24. (SO 5) According to the Online Privacy section of the AICPA Trust Services
Principles, what types of personal information should be protected? All information
collected from customers should remain private unless the customer has given
implicit or explicit permission to share such information with third parties. In addition,
companies should collect only data necessary to conducting the transaction.
25. (SO 5) If you could condense the ten areas of Online Privacy in the AICPA Trust
Principles, into a shorter list (three, four, or five point list), how would you word that
list? Collect only necessary data, keep that data private unless the customer gives
Chapter 14 Solutions E-commerce and E-business
a much broader concept that includes electronic forms of process improvement
throughout the supply chain. Thus it can include processes between a business and
its suppliers, a business and its customers, or internal processes. It also includes
many forms of electronic enhancement beyond web-based.
supply chain.
30. (SO 6) Which functions within the supply chain can be enhanced through the use of
e-business? Virtually any process within the supply chain can be enhanced through
e-business.
31. (SO 6) How are activities in the supply chain interdependent? They are
32. (SO 6) In what ways are the characteristics of e-business different from e-
commerce? E-business is often business to business, while e-commerce is business
33. (SO 8) What are the three levels of network platforms that are utilized in e-business
and which groups use each level? The Internet is used by internal and external
34. (SO 8) Which type of users should have access to an intranet? Only those inside
the company.
35. (SO 8) Which type of users should have access to an extranet? Trading partners
such as suppliers, secondary suppliers, and distributors.
36. (SO 9) What types of controls should be used to properly limit access in intranets
and extranets? Authentication controls should be used, including controls such as
37. (SO 10) Why is the use of XML advantageous in Internet EDI? XML allows a more
38. (SO 10) In what ways are XBRL financial statements advantageous when compared
to traditional paper financial statements? XBRL statements can be viewed by a
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browser, or printed. In addition, the viewing of an XBRL statement on a web
browser could be much more interactive. For example a reader of the statements
could click on an item such as sales to see more underlying detail of the sales total.
39. (SO 11) What are some of the ethical obligations of companies related to e–
Brief Exercises
41. (SO 1) Much of the e-business and e-commerce conducted by companies uses the
Internet as the form of electronic communication. Describe other electronic means
to conduct e-business or e-commerce. Electronic Data interchange (EDI) and
Electronic Funds Transfer (EFT) are other communication means.
42. (SO 3) How does the use of HTML, URLs, domain names, and SSL contribute to an
Internet that can be used world-wide? There are many different types or brands of
43. (SO 4) Describe the benefits to the consumer of B2C sales. Customers benefit in
through increased access, speed, convenience, and information sharing inherent in
44. (SO 4) Describe the benefits to the company of B2C sales. Benefits to the
company are: a broader market of customers beyond the geographic area of any
45. (SO 5) Describe the benefits to a company that engages in B2B transactions via the
Internet. They are a wider potential market, reduced transaction cost, higher profits,
faster cycle times for product purchase or sale and cash flow, reduction in keying of
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information and reduced data errors.
46. (SO 5) What are the ten areas of privacy practices described in the Online Privacy
section of the AICPA Trust Services Principles? The ten areas are: management,
47. (SO 6) Describe the activities that take place in the supply chain of a manufacturing
firm. Before a manufacturer can produce goods, it must buy raw materials from
48. (SO 6) Describe the differences between B2C and B2B. B2C is a sale between a
company and an end consumer. B2B is a sale or purchase between two
companies. The differences in these types of transactions causes many differences
in the characteristics of the transactions. A B2B sale is likely to be ordered via a
purchase order, with many line items on the purchase order, with a relatively high
company and it is likely to be a credit card sale.
49. (SO 9) Explain the importance of user authentication and network break-in controls
in extranets. Only trading partners such as suppliers, secondary suppliers,
distributors, or retailers should have access to an extranet. That is, it should not
50. (SO 10) What are the advantages of Internet EDI over traditional EDI? The Internet
allows cost-free exchanges of data. In traditional EDI, the companies usually pay a
Problems
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51. (SO 2) Explain the hardware or standards that were developed during the ARPANET
that were an important foundation for the Internet of today. There were hardware
items or standards developed during the ARPANET time frame. These include
52. (SO 4) The Pizza Pit is a local chain of pizza restaurants in Dallas. The chain has
30 locations throughout the city and its suburbs. The management is considering
opening a Web site to conduct e-commerce with customers. Describe any benefits
53. (SO 5) Using your favorite search website, enter the term “privacy seal” and search.
Answer the following questions:
a. What is the purpose of a Web privacy seal? The purpose of a privacy seal is
to inform customers that the company web site adheres to high standards of
privacy of data. When a company displays a privacy seal, they are alerting
customers that the company can be trusted to maintain the privacy of
customer data.
b. Which organizations provide Web privacy seals to web-based companies?
54. (SO 5) Visit the website www.cpawebtrust.org and answer the following questions:
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e. What is a WebTrust seal? A Webtrust Seal is placed on a web site of a
company that has been examined by a CPA firm to determine that it has
appropriate privacy practices and that it adheres to those practices.
f. Which organization sanctions the WebTrust seal? The American Institute of
55. (SO 5) Enter the Web site of a popular retail company that sells a large volume of
goods or services on the Internet. Search for company “Privacy Policies” on that
Web site. If you do not find any privacy policies, continue visiting other company
Web sites until you do find privacy policies. Once you have found a company with
privacy policies, describe how the company policies do or do not meet the privacy
practices in the AICPA Trust Principles. The solution will depend on which company
the student uses in their answer. For any company, the student answer should
compare the privacy practices against those in the AICPA Trust services Principles
c. How is this information shared?
d. What choices do you have?
e. How do you access and update your information?
f. How is this information protected?
Target identifies the information it collects such as name, address, e-mail
address, phone number, drivers’ license number, credit card number, and
purchase/return/exchange information. Target also indicates that any information
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The site also discloses how a customer can limit use of data provided. It appears
that when information is collected by Target, customers are giving implicit
consent to use information as outlined in the privacy practices. Within the
privacy policy, there are several instances in which Target identifies a toll free
number that a customer must call to opt out. This would include the ability to opt
56. (SO 8) EDIPipeline is an Internet EDI solution for small to mid-size companies. View
system for small and mid-size entities that allows them to sell products or services to
large corporations via an EDI system. It is a simple o user system that is based on a
web browser and it gives the company an “Inbox” showing all received EDI purchase
orders (POs), and “Outbox” showing all pending outbound documents (i.e. 810
Invoices, 856 Advance Ship Notices, 855 Purchase Order Acknowledgements, and
997 Functional Acknowledgments), and logs for sent, received, and deleted
documents. It includes the capability to import the PO information directly into the
company’s accounting system. This would eliminate the need to manually key
purchase order information into the accounting system. This would save time, costs,
and reduce errors. Since the software is web-based and works on a browser, it can
be accessed from an computer and very little training is necessary for employees.
Chapter 14 Solutions E-commerce and E-business
b. Most financial statement data reported by public companies is now more
comparable from company to company – in the past, one company’s
“cash” line item could be defined vastly differently from another company’s
“cash.” Today, creators and users have agreed-upon definitions for every
term.
58. (SO 5) List and describe the nine privacy practices recommended by the AICPA
Trust services Principles Privacy Framework. If you have ever made a purchase
online, you have likely seen these practices in use. Provide any examples from
your own personal experience.
Management. An organization should properly manage privacy. This means
that a person or persons must be assigned responsibility to oversee privacy
Choice and consent. The company should tell customers of any choices the
customer might have to opt out of providing information. Also, the online company
should gain consent from the customer to collect, use, and retain the information.
Consent can be implicit or explicit.
Collection. The company should limit collection of customer data to that data for
which they have received consent.
Use and retention. The company should only use customer data as disclosed in its
privacy policy and should retain such data only as long as necessary.
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59.
Cases
60. Beach Beauties,Corp. (BBC) and delivery problems.
Required:
a. Speculate as to potential causes of this problem. It appears that Alex and
possibly other sales representatives are making date entry errors as they
enter the delivery information. Alex’s original sales order files specify
delivery to the retail stores and this would indicate that customers are not
making the error as they e-mail sales orders, but that Alex is making data
errors as he enters delivery information.
b. What additional information would be needed to determine the actual
cause of this problem? A computer log of the transactions may help
determine the errors.
c. What controls could be implemented to avoid repeated instances of this
61. Caseline Analytics and XBRL.
Required:
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The introduction of XBRL tags enables automated processing of business
information by computer software, cutting out laborious and costly
processes of manual re-entry and comparison. Computers can treat
XBRL data “intelligently”: they can recognise the information in a XBRL
document, select it, analyse it, store it, exchange it with other computers
and present it automatically in a variety of ways for users. XBRL greatly
increases the speed of handling of financial data, reduces the chance of
error and permits automatic checking of information.