1. Reading review questions

Accounting Information Systems:

Basic Concepts and Current Issues (4 th edition) Dr. Bob Hurt, C.F.E.End-of-chapter solutions

Chapter 1: Role and purpose of AIS

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• Reading review questions
• What 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.b.Explain three reasons AIS is an important area of study for future accountants.(1) Developing a strong AIS helps achieve some of the components of the FASB Conceptual Framework of Accounting. (2) Studying AIS helps students develop many of the core competencies suggested by the AICPA. (3) Acquiring knowledge about AIS helps students learn more about common business processes.

• List 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.Identify five broad criteria you can use to evaluate information on the Internet and in other sources. The University of Maryland University College offered five criteria for information evaluation. They are: authority, accuracy, objectivity, currency and coverage.e.In a manner specified by 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 Business World.” As in previous editions, I’ve posted responses to each chapter’s AIS in the Business World on my accounting information systems blog (www.bobhurtais.blogspot.com). Look for the 4 th edition’s responses in the 15 December 2014 post.

• Multiple choice review questions. Answers to all of these questions appear at the

end of the textbook itself.Accounting Information Systems 4e Robert Hurt (Solutions Manual All Chapters, 100% Original Verified, A

• Grade) 1 / 4

Accounting Information Systems: Basic Concepts and Current Issues (4

th edition) Dr. Bob Hurt, C.F.E.End-of-chapter solutions

Chapter 1: Role and purpose of AIS

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• Reading review problem

a.Consider the five business processes described in the chapter. Which one best applies to the activities described? Why? The activities described are most closely aligned with the sales / collection process, since they involve selling goods to a customer and collecting payment. In addition, preparing the food (Step 4) is an example of a conversion process.b.Does Richie’s need an accounting information system? Why, or why not?Richie’s, like all organizations, needs an AIS. If properly designed and implemented, the AIS can produce general purpose financial statements and other outputs which will serve as a basis for decision making.c.If you were an accountant for Richie’s, how might you demonstrate the AICPA core competencies discussed in the chapter in your interaction with management? The chapter discussed six elements of the AICPA core competencies framework. The broad business perspective competencies included strategic / critical thinking and resource management; functional competencies were risk analysis and research. Personal competencies discussed in the chapter were problem solving and decision making and communication. An accountant could demonstrate strategic / critical thinking by focusing on what accounting (and other) data tell management about how to compete more effectively in their markets; resource management competencies come into play, for example, by understanding human motivation and applying theories like Vroom’s expectancy theory. All organizations face risk; an accountant could point out risks in interacting with management. Research would be required as part of strategic thinking, since knowing what competitors are doing can inform what Richie’s does. Both personal competencies are an integral part of the others.

• Suggest one example of each generic AIS element within the context of

Richie’s. Input, customer order. Process, collecting payment. Output, customer bill.Storage, electronic files with accounting data. Internal control, Developing standard procedures for taking orders, preparing and delivering food.

• Do a Google search on “operating a successful restaurant.” Pick one of the

articles it produces and evaluate it using the UMUC criteria. One such article is “Start A Killer Restaurant: 6 Tips” by Jeff Haden. It appeared in the 23 January 2012 issue of Inc. magazine. Here is a sample evaluation using the UMUC criteria.•Authority. The author is a professional journalist; his contact information is provided at the end of the article.•Accuracy. The article explains that the source of the information is an interview with a successful restaurant owner. It does not appear to have erroneous information. 2 / 4

Accounting Information Systems: Basic Concepts and Current Issues (4

th edition) Dr. Bob Hurt, C.F.E.End-of-chapter solutions

Chapter 1: Role and purpose of AIS

..1-3 •Objectivity. The article is not primarily advertising oriented, but it does have some information about the restaurant owner’s businesses. The article is available freely.•Currency. The article is about two years old, which means it could be a bit dated in the fast-paced restaurant industry. But, its advice seems as applicable today as they were in 2012.•Coverage. The article is completed; it is not particularly deep, but its length seems tailored to both the venue and its audience.

• Making choices and exercising judgment

Students’ answers may vary significantly since the point of these exercises is for them to think critically. Nevertheless, here are a few elements they might include in a discussion of Sebastian and Viola’s IT needs.•Spreadsheets. Commonly available and widely used, but they are not specifically designed for accounting tasks and can be cumbersome.•General ledger software. Several choices are available and most accountants know how to use at least one or two. Choosing can be challenging.•Tax preparation software. This tool can make the process of filing tax returns simpler, but it still requires significant recordkeeping. 3 / 4

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• Field exercises

Answers to these exercises will vary significantly. Although I’m not providing solutions to them, don’t hesitate to share your students’ work with me if they come up with an especially strong response.

6.Look up the following references online or in your school’s library. Using the criteria and specific questions from the UMUC Web site referenced in the chapter,

evaluate and discuss the quality of each reference. (Note: I found all these

articles through ABI Inform; many of them may also be accessible on the publications’ own web sites. I’m analyzing the first article in the list to demonstrate how to use the UMUC criteria.) “Xelltec Reports Laptop Security Microchip.” Wireless News, 25 February 2011.Authority: This brief article is very weak in terms of authority, as its author is listed as “anonymous.” Presumably, the article was written by someone at Xelltec.Accuracy: The article appears to have no major errors of fact; however, it does not provide much in the way of facts since its main purpose appears to be publicity for the security microchip.Objectivity: This article’s main purpose is to advertise the security microchip; thus, it is not very objective. Note the last sentence, which states that the company is in the business of selling security devices.Currency: The article was published in February 2011. Thus, its information is fairly current.Coverage: As far as it goes, this article does an OK job of coverage. However, in the broader sense, its coverage is inadequate, since it does not compare the company’s security microchip to other forms of IT security.

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