Chap 001

Chapter 01 - Role and Purpose of Accounting Information Systems
Chapter 01 Role and Purpose of Accounting Information Systems

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2013 y !c"ra#-$ill %ducation& 'his is proprietary material solely for authori(ed instructor use& )ot authori(ed for sale or distriution in any
manner& 'his document may not e copied* scanned* duplicated* for#arded* distriuted* or posted on a #esite* in #hole or part&
1. Reading review questions

a. hat is an accounting information system! An accounting information system,
like all systems, is a collection of inter-related parts designed to achieve a specific goal.
In the case of AIS, that goal is to prepare information for decision making.
". #escri"e the purpose of the $AS% conceptual framewor&. #iscuss how it
relates to your study of accounting information systems. The FASB conceptual
framework was pulished in !"##$ its intended purpose was to provide some guidance
for the development of future accounting principles. The framework relates to the study
of AIS in many ways, including identifying the elements of financial statements tracked
y the AIS and specifying the characteristics information should have to make it useful
for decisions.
c. 'ist and discuss the five parts of a generic accounting information system.
The five generic parts of the AIS are% inputs &such as source documents', processing
&such as with general ledger software', outputs &such as the general purpose financial
statements', storage &such as in master and transaction files' and internal control &such
as separation of duties'.
d. Compare and contrast sponsored information( practitioner)pu"lic information(
and scholarly information. All three types of information can, under the right
circumstances, e useful. Sponsored information is a lot like advertising$ someone has
paid a fee to have the information disseminated. (ractitioner information focuses on the
application of ideas to some specific case, such as a )ournal article that e*plains how a
company estimates ad dets. Scholarly information meets much more rigorous
standards for peer review, generali+aility and research design.
e. Identify five "road criteria you can use to evaluate information on the Internet
and in other sources. The ,niversity of -aryland ,niversity .ollege offered five
criteria for information evaluation. They are% authority, accuracy, o)ectivity, currency
and coverage.
f. In a manner specified "y your instructor *e.g.( individually or with a group( as a
written paper or as an oral presentation+( prepare an original response to one or
more of the questions for this chapter,s -AIS in the %usiness orld.. I was very
fortunate to have three assistants availale to prepare responses to the AIS in the
Business /orld vignettes for the third edition$ I0ve posted their responses on my AIS
log% www.ohurtais.logspot.com.
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/. 0ultiple choice review questions. Answers to all of these 1uestions appear at the
end of the te*took itself.
1. Reading review pro"lem
a. #oes #airy 2ueen need an accounting information system! hy( or why not!
All organi+ations need some form of AIS to capture data and transform it into
information that will e useful for decisions. The sophistication and technical aspects of
the system may vary across organi+ations.
". Suggest one e3ample of each generic AIS element within the conte3t of #airy
2ueen. Inputs for 2airy 3ueen0s AIS could include receiving reports for raw materials
and receipts for ank deposits. (rocessing tools include cash registers and general
ledger software, while outputs would include the general purpose financial statements
and reports from an individual restaurant to the corporate office. Storage elements
2airy 3ueen might incorporate include sales transaction files and vendor master files.
Internal controls could include the use of cash registers for transaction processing, as
well as using standardi+ed recipes to avoid wasting material.
c. 4ow might this case "e incorporated in other accounting courses( such as
financial accounting( cost accounting and ta3ation! A generic case for a company
like 2airy 3ueen could e incorporated in many other accounting courses. In financial
accounting, the case might focus on how to record common transactions in 2airy
3ueen0s AIS$ it could also e a vehicle for analy+ing the company0s financial
statements. .ost accounting aspects of the case would include the use of direct
material and direct laor standards for preparing menu items, as well as potential
applications of activity-ased costing. A ta*ation course might look at the corporate
income ta* filings and related documents, then recommending ta* planning ideas to
management.
5. 0a&ing choices and e3ercising 6udgment
The point of these e*ercises, which appear in every chapter throughout the third edition,
is to encourage students to think critically and 4outside the o*.5 Thus, I am not
providing solutions to them, as doing so would likely discourage the purpose of these
e*ercises.
7. $ield e3ercises
Answers to these e*ercises will vary significantly$ thus, like the previous set, I am not
preparing pulished solutions for them.
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8. Information types
a. scholarly
. popular 6 practitioner
c. popular 6 practitioner
d. scholarly
e. scholarly
f. popular 6 practitioner
g. popular 6 practitioner
h. sponsored
i. sponsored
). sponsored
9. :ther than those listed in 2uestion 7( find one or two e3amples *each+ of
sponsored( practitioner( and scholarly e" sites( 6ournals( or other periodicals.
%e prepared to e3plain your choices and their classifications.
Sponsored% The we site for 7ewlett-(ackard &www.hp.com' is an e*ample of
sponsored information$ its main purpose is to sell 7( products and services.
(opular 6 practitioner% The /all Street 8ournal &online.ws).com' is an e*ample of this
type of information. It is designed primarily for people in usiness.
Scholarly% Issues in Accounting 9ducation is an e*ample of a scholarly )ournal$ its
articles are typically written y professors, for professors. &If your school0s lirary has
access to .aell0s 2irectories of (ulishing :pportunities, you might consider using it to
identify scholarly )ournals.'
;. 'oo& up the following references online or in your school,s li"rary. <sing the
criteria and specific questions from the <0<C e" site referenced in the chapter(
evaluate and discuss the quality of each reference. *=ote> I found all these
articles through A%I Inform? many of them may also "e accessi"le on the
pu"lications, own we" sites. I,m analy@ing the first article in the list to
demonstrate how to use the <0<C criteria.+
4;elltec <eports =aptop Security -icrochip.5 Wireless News, >? Feruary >@!!.
Authority% This rief article is very weak in terms of authority, as its author is
listed as 4anonymous.5 (resumaly, the article was written y someone at
;elltec.
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Accuracy% The article appears to have no ma)or errors of fact$ however, it does
not provide much in the way of facts since its main purpose appears to e
pulicity for the security microchip.
:)ectivity% This article0s main purpose is to advertise the security microchip$
thus, it is not very o)ective. Aote the last sentence, which states that the
company is in the usiness of selling security devices.
.urrency% The article was pulished in Feruary >@!!. Thus, its information is
fairly current.
.overage% As far as it goes, this article does an :B )o of coverage. 7owever,
in the roader sense, its coverage is inade1uate, since it does not compare the
company0s security microchip to other forms of IT security.
A. Berminology
!. 9
>. .
C. D
E. F
?. 2
F. 7
#. B
G. A
". 8
!@. I
10. 0ultiple choice questions
!. A
>. .
C. B
E. B
?. .
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11. Statement evaluation
a. sometimes true. 2ata can e stored either electronically, on paper or oth. /hen
data are stored electronically, they might e stored on a disk, on a flash drive, on a
network or in some other medium.
. never true
c. always true
d. sometimes true. If information found on the Internet meets estalished criteria, such
as those suggested y ,-,., it can e very reliale.
e. always true
f. always true
g. sometimes true. /hether internal and e*ternal users can use the information
depends on a numer of factors, including the type of information and the sophistication
6 ackground of the users themselves.
h. never true
i. sometimes true. Source documents can e paper-ased$ they can also e, and
increasingly are, electronic.
). sometimes true. Some 1uestions in AIS have a single correct answer, such as 4what
is the )ournal entry to record the purchase of inventory on account in a perpetual
system.5 :n the other hand, many 1uestions in AIS have more than one good answer,
such as when someone evaluates the suitaility of information.
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1/. %log e3ercise
=earning o)ective% 49*plain the structure of most accounting information systems.5
Bnowledge% =ist the five generic parts of most accounting information systems.
.omprehension% .onsider a well-estalished usiness like Barnes and Aole
ookstores. Dive one e*ample of each generic AIS element that Barnes and
Aole would use.
Application% The accounting information system has five generic elements, one
of which is internal control. Suggest three internal controls you would
recommend for a Barnes and Aole retail store.
Analysis% A specific internal control can relate to one or more of the other four
AIS elements$ for e*ample, acking up data files relates to oth storage and
processing. 7ow would the following internal controls relate to the other generic
AIS elements% ank reconciliation, procedures manual, data encryption.
Synthesis% .onsider the following items that might e part of an accounting
information system% sales invoice, receiving report, making )ournal entries,
receiving previously purchased inventory, statement of cash flows, accounts
payale aging, customer master file, sales transaction file, password rotation
re1uirements, company e-mail policy. Droup them ased on the five generic
elements of the AIS.
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Chapter 01 - Role and Purpose of Accounting Information Systems

Chapter 01 Role and Purpose of Accounting Information Systems

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