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Core Concepts of Accounting Information Systems, 13 th 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 software. Extranets are similar to intranets, except that they are also accessible by a limited number of external parties—for example, employees working from home or suppliers.
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 reports, announcements, or financial activities. They also enable accountants to collaborate with each other, using group collaboration tools. These same ideas apply to extranets.Finally, these networks are important to accountants because so much commerce and financial information is transmitted over them and also because their security and efficiency are important auditing concerns.
2-2. The term “blogs” is an abbreviation for web logs, and is a groupware (collaboration) tool that allows computer users and web browsers to publish personal messages online. Blogs enable their users to create, share, and leverage knowledge in any kind of organization. Those who are currently exploring the potential of blogs are for-profit companies, government organizations, and universities.
2-3. As of June, 2014, Bitcoin was still a viable currency that was trading at $444.80 (U.S. dollars) per coin. Every other virtual currency has eventually failed, however, so checking the price daily might be important to owners. This question also asks students whether they would buy bitcoins. Their answers can create some lively class discussion.
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 such sites to gauge public reaction to a recent safety recall, a fast-food chain might check them to measure public opinion about a new meal offering, or a music figure might check them to assess whether a new record album has created enough “buzz.”
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, while 69% anticipate expanded use of such resources in the future. Again according to this survey, about half of all businesses plan to use it to increase public awareness of their organizations, products, or services—an application of perhaps special interest to public 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 Core Concepts of Accounting Information Systems 13th Edition Simkin Solutions Manual Visit TestBankDeal.com to get complete for all chapters
Core Concepts of Accounting Information Systems, 13 th Edition, by Simkin, Rose, and Norman
SM 2.2
view on the Internet employ it. If you use Microsoft Internet Explorer, you can view the source code for a given web page by selecting “Source” from the View menu.
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, developers have extended HTML with XML—an acronym for “extensible markup language” that allows users to create their own tags. Anyone can create such tags, but businesses need standards. For example, we don’t want one entity using
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 without having to re-key the data—a very real advantage. Until recently, however, most government agencies stored the data submitted to them by individuals or businesses in either hard-copy formats or word documents. Today, however, government agencies are also storing such data in XBRL formats. One such agency is the Securities and Exchange 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 relationship between XBRL and IDEA is very direct, therefore: IDEA is a database 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 electronically transmit such documents as invoices, credit memos, purchase orders, bids for jobs, and payment remittance forms). Much EC is performed over the Internet, but companies such as Wal-Mart, IGT, and some of the phone companies also transmit messages over private networks or communications channels to which the general public does not have access.
EC is important because (1) there is so much of it today, (2) the uses of EC are expanding, (3) even the smallest company can create a website and compete with larger businesses, and (4) Internet retail sales are growing. As noted in the text, some businesses now rely on the Internet for over half of their annual sales revenues. For businesses such as Dell, Amazon.com, or E-trade, the percentage is much larger.
EC is important to accountants because electronic documents can be more difficult to control, authenticate, or audit. Security is also a major issue because assets are less tangible, compromised systems are not obvious, and information losses are not easy to verify. The final section of the chapter discusses some major privacy and security concerns.
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 works like this: A customer buys something from a seller, using credit advanced by the third party—e.g., Paypal. The third party pays the seller and then, in turn, debits the buyer’s credit
Core Concepts of Accounting Information Systems, 13 th Edition, by Simkin, Rose, and Norman
SM 2.3
card or account. One advantage of using such a system is that buyers need only provide their credit card numbers or otherwise establish accounts with one company—the e-payment company—not each company with which they wish to do business. Another major justification for using E-payments is security. Credit-card information is at risk when it is transmitted over data communications lines or stored in the computer files of many vendors.
2-9. Electronic data interchange (EDI) refers to transmitting routine business documents such as shipping notices, customs forms, invoices, and purchase orders electronically. Companies use EDI because it is often a superior way of doing business. For example, because the outputs from one company (e.g., the information on a computerized purchase order) are the inputs to another company, EDI allows its users to avoid the time delays and costs of transcribing the data once the information has been received. This 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) streamlining processing tasks, (2) faster response to customer queries or vendor data transmissions, (3) reductions in paperwork, and (4) a secure processing environment that is separate from the post office or an overnight delivery system.
2-10. This question asks students how comfortable they are giving their credit card numbers to retail websites and therefore has no right or wrong answer. While some individuals are comfortable entering their credit card numbers into websites for Internet purchases, others fear for their cards’ security. There is certainly much to fear. Identity theft, in which someone steals the identity of another, is easy when the thief knows such important information as a person’s credit card number(s) and similar personal information.
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 advertiser’s link(s). But this requires the website administrator to count the actual number of clicks, per month. Click fraud occurs when website personnel repeatedly click on that link themselves or artificially inflate their counts, thereby defrauding the advertising company.The advertiser loses out in such situations because it pays for advertising services that do not lead to sales, while the website owner benefits from the inflated billing revenues.
Judging by the amount of advertising for click-fraud services and software, click fraud is either common or often feared. We also know that savvy computer programmers can write java scripts to simulate user clicks, thereby automating click-fraud activities. Wikipedia notes that it is a felony in many jurisdictions—for example, is covered by Penal code 502 in California as well as the Computer Misuse Act 1990 in the United Kingdom. Several arrests have been made relating to click fraud.
Finally, it should be noted that a host’s website personnel are not the only perpetrators of click fraud. Other possibilities include competitors seeking to deplete the advertising budgets of their targets, individuals seeking to damage the reputation of the host-publishers, misguided supporters of the host company (who seek to help it by increasing its ad revenues), and private vandals, who randomly target a particular company.
Core Concepts of Accounting Information Systems, 13 th Edition, by Simkin, Rose, and Norman
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- messaging, faxing, web-searching, and mobile-phone texting venues. One reason why spamming is of interest to accountants is because spamming is relatively costless to advertisers but relatively costly to recipients and Internet service providers who must transmit and deliver spam messages. In 2007, for example, the California legislature 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.
Spammers require large lists of email accounts—the types of lists often found in accounting information systems. This makes AISs natural targets for spammers, and therefore a known security risk. The purpose or intent of spammers is also of concern to AISs, as a great deal of spam advertising is to sell pornography, perform an identity theft, or commit some other kind 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 additional small payments for “taxes” or other “transaction fees?” Finally, spammers clog the data transmission channels with their communications, adding to the total bandwidth required by the Internet.
Although students may argue that all spamming should be illegal, there are several counter arguments as well. Spammers can argue that some of their communications contain legitimate advertising, information that is of use to recipients, or valuable information about political activities or pending legislation. They might also claim that spam email is easily deleted, and often automatically filtered from recipient mail boxes. Wikipedia contains an 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 are simply software programs installed on web servers. These firewalls are implemented by IT professionals. The specialized software in firewalls compares the IP addresses of outside users requesting information to current access control lists.
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 bonafide IP address to gain access to a system.
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 control web access (e.g., to limit employee accesses to professionally-related sites).However, proxy servers can also run the software that creates internal firewalls.
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 transmission. The data used to encrypt (code) the message is called the encryption key.
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