Accounting Information Systems, 10e 1
SOLUTIONS FOR CHAPTER 2
Each end-of-chapter question in the Solutions Manual is tagged to correspond with AACSB, AICPA
and CISA standards, allowing professors to more easily manage the task of reporting outcomes to these
professional and accrediting bodies. Please see the corresponding spreadsheet file for the tagging
information.
Discussion Questions
DQ 2-1 After the core of an ERP system has been implemented, any of the modules may
then be implemented separately. What is the implication of being able to
implement an ERP system on a piece-by-piece basis?
ANS. An advantage of being able to implement individual modules is that you can
DQ 2-2 The Nile Company is considering taking customers’ orders on its Web site.
a. What information would Nile collect from the customer during this process?
b. What information would need to come from Nile’s Web and back-end systems
to complete the order?
c. How would an enterprise system facilitate this exchange of information?
ANS. a. Collect customer number or name. If this is not an existing customer, Bluffs
would need customer address, contact information, and so on. Bluffs would
also need to collect the product codes and quantities that the customer is
ordering.
server in a timelier manner and with a higher level of data integrity.
2 Solutions for Chapter 2
DQ 2-3 Periodically, you will read in the news about one company in the ERP industry
acquiring another company in that industry. Discuss the pros and cons of
consolidation of the ERP software industry.
ANS. Pros include enhanced functionality of individual products as vendors incorporate
the features of several products into one. An organization can do one-stop
DQ 2-4 Describe how an enterprise system can assist an organization in optimizing its
value system.
ANS. In general, an enterprise system provides data from across an organization’s
functions and permits optimal planning and decision making. For example, by
DQ 2-5 Consider a business process that you have experienced at work, as a customer, or
as a student. Examples might include any process in a work setting, such as
payroll and purchasing, or any process with which you have interacted, such as
ordering from a Web site, obtaining a loan, eating at a restaurant, or registering
for classes at your college or university. Describe the degree to which the steps in
the process are integrated. What is/was the impact of that integration on you and
on the organization?
ANS. The purpose of this question is to get students to appreciate the impact of process
integration, or lack thereof, on organization employees, customers, and students.
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DQ 2-6 Describe a situation in which information would be shared between two of the
“silos” in Figure 2.2. What data would be shared? Why would the data be
shared? (Hint: You may want to refer to Figures 2.3, 2.7, or 2.10 in the text.)
ANS. This solution includes only a few examples. The experience and background of
the students will dictate the quantity and nature of their responses:
• Finance and accounting must share accounting data about outstanding
DQ 2-7 Why might a firm decide to implement only certain modules in an ERP system
rather than a complete implementation?
ANS. Discussion of this question should begin with recognition of the complexity of
ERP systems and the difficulty and time required for a full-blown implementation.
DQ 2-8 In what circumstances would a company choose a best-of-breed approach over a
traditional ERP system?
ANS. A company would choose a best-of-breed approach if their process is
4 Solutions for Chapter 2
DQ 2-9 Describe the primary and supporting activities involved in an organization’s
value chain. Explain the importance of having an effective value chain.
ANS: A value chain is a series of activities, or business processes, performed by an
organization to transfer inputs into outputs valued by customers. Primary
Short Problems
SP 2-1 ANS. Who: Information identifying the customer and the salesperson.
What: Information identifying the inventory items and quantities ordered.
SP 2-2 ANS. More data is available to be easily linked together and used to create information
in enterprise systems. On that premise, we offer the following examples: (1) A
warehouse manager has the ability to look at sales orders that have not yet been
shipped to follow up and find out why. Without an integrated enterprise system,
the manager may not have access to this information and therefore would not
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SP 2-3 ANS. An example of a business event is a clothing store (e.g., Gap) selling a shirt over
the Internet. Its enterprise system allows data sharing across the many business
processes that must occur to complete the sale. The company may automatically
access its warehouse database to determine whether or not the item is in stock or
back-ordered. Once the customer enters his shipping/billing information, the
SP 2-4 ANS. The overall benefit of an enterprise system is the connectivity of modules and the
capability to bring related data together in one system. While extracting data from an enterprise
system may be complex, for a forensic accountant that complexity is MUCH lower than
extracting data from disparate systems then pulling the data together to look for anomalies. In
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Problems
P 2-1 ANS. Students should find one or more of the ERP disaster stories such as those that
occurred at Hershey, FoxMeyer, and Whirlpool. In addition, they should find
stories related to successful ERP implementations such as Indian Motorcycle
Company of America and Cisco Systems, Inc. Factors leading to successful or
P 2-2 ANS. Because student responses will depend on the package that they select, no
solution is provided for this problem.
P 2-4 ANS. Expect students to include steps similar to those included in this chapter,
including the following:
• Step 1: A customer can log on to a Web site and perform inquiries as to price
and availability of items. The Web site might perform presales activities such
as collecting and retaining customer (or prospective customer) data.
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P 2-5 ANS. Before we can determine if the furniture manufacturer needs an ERP system we
need to learn more about its characteristics and information requirements. Here
are some sample questions that would need to be answered:
• Do they manufacture for stock or only for special orders?
P 2-6 ANS. This answer will be dependent on the organization the student selects.
P 2-7 ANS. If the company used is Skullcandy the following is a suggested solution:
(Answers would likely be similar for most other companies.)
• CRM – for retail sales, the company can keep track of the customer’s
name and contact information. Periodically, they can send new product
information, offer “existing customer” specials, and send offers when
nearing the expected life of the product. The CRM also makes customer
self-service purchasing easier for returning customers. For wholesale
8 Solutions for Chapter 2