Solutions Manual
to accompany
Accounting Information
Systems 4e
Brett Considine, Alison Parkes, Karin
Olesen, Yvette Blount & Derek Speer
Prepared by
Brett Considine
John Wiley & Sons Australia, Ltd 2013
, Chapter 3: Database concepts I
Chapter 1: Introduction
Discussion Questions
1.1 Describe some inputs, processes and outputs of an accounting information system.
(LO1, LO2, LO3)
Inputs: Sales order (record purchase requests from customers), purchase data (data about
purchases initiated with our vendors), Receiving data (data about arriving goods), shipping data
(data about goods sent to customers), invoices (received from vendors)
Processes: Check data is valid, sort data, manipulate data
Outputs: Invoice (sent to customer), cheque (sent to vendor), profit and loss report, accounts
receivable report
1.2 What is the difference between data and information? (LO2)
Data are the raw facts relating to or describing an event. For example, data relating to a sale
could include the customer‘s name, address, salesperson ID, the sale number, sale date, items
purchased, quantity purchased and so on. On its own this data is not all that useful. However,
through the application of rules and knowledge the data can be made meaningful, thus converting
it to information. For example, the collection of data relating to sales may be summarised into
sales by customer or sales by product, to provide information about high spending customers or
slow moving products.
1.3 What is information overload? What are its consequences? (LO2)
Information overload refers to the situation where an individual has more information than
required and can‘t meaningfully process this information when making a decision. The potential
consequences of information overload include the production of reports and information that
serves no purpose and deleterious decision making by employees who are unable to synthesise
the volume of information that they are exposed to.
1.4 Briefly summarise the changing relationship between accounting and information
systems. (LO4)
This question can be answered with reference to Figure 1.5, which depicts the changing nature of
and interaction between accounting and information systems. Regarding the role of accounting
we see that initially accounting was the primary source of information for an organisation. In the
original manual accounting environment, the people who did the accounting also represented the
technology of the system – the accountant kept records and stored data and synthesised it into
reports. In essence, the accounting function and the information technology function were one.
The advent of computing technology and other processing technologies described in the chapter
were based around ways of making the accounting task easier. When the information technology
first hit organisations it was predominantly seen as a way of helping the accountant – thus
information systems were the domain of the accountant. This is represented in the top part of
figure 1.5. The domain of information technology soon expanded, encompassing more than just
© John Wiley and Sons Australia, Ltd 2013 3.1
,Solution Manual to accompany Accounting Information Systems 4e
accounting. As a consequence, we have the scenario depicted with the intersecting circles in
figure 1.5. With the growth of information systems, the traditional roles of data management and
storage that were previously the domain of the accountant began to be consumed by the
information systems domain, with the accounting function being separate from the technology
that allowed its execution. Finally, technology was incorporated to many areas of the
organisation, not just the accounting role. The technology/information systems role became the
focus, and it served many areas of the business, of which accounting was one. Thus accounting
became a user of the information systems function in order to complete its tasks. Thus
accounting has gone from being in control of the information systems function to being a user of
the information systems function as technology has advanced and it has become necessary for
people to be experts in technology.
1.5 Compare the role of the accountant today to his or her role before the introduction
of computer technology. How have the responsibilities and duties changed over
time? (LO4)
The discussion of this question can be tied into the discussion in question 1.4. What becomes
evident from the historical discussion of the evolution of the accounting and information systems
function is that the accountant has gone from being responsible for both the accounting function
and the information management function associated with accounting to just being responsible
for the accounting function. The technically qualified personnel, who do not necessarily have
accounting skills, have become responsible for the information storage function associated with
accounting. In a sense, the responsibilities of the accountant have been reduced, since they have
lost direct control of the information storage function associated with the accounting discipline.
Some may also argue that this shift has created a greater need for accountants to be trained not
just in the technical skills of accounting but also in skills of information management, for
example information systems.
1.6 What are some of the uses of accounting information? Provide five examples of how
accounting information may be used and who it would be used by. (LO5)
The table below provides some typical examples of how accounting information may be used.
USER USES OF ACCOUNTING INFORMATION
Shareholder Uses the general purpose financial reports to assess the performance of
the company they have invested in, assessing both historical
performance and using the historical information to make predictions
about future performance.
Managers Are commonly exposed to bonus schemes that are based on profit
levels or other financial performance indicators. Thus managers have
accounting information being used as a performance assessment
device.
Union May use financial reports of companies – particularly profit
information – to substantiate claims for higher wages for union
members.
Bank Will look at financial performance and financial position information
when assessing credit worthiness of loan applicants.
Suppliers A company‘s suppliers may wish to view financial information before
entering in to long term supply agreements, in order to ensure that the
company is able to meet the terms of the agreement and pay for the
supplies that are purchased.
© John Wiley and Sons Australia, Ltd 2013 3.2
, Chapter 3: Database concepts I
Problems
1.1 Conduct a web search and find an example of each of the following data input
techniques: manual keying via a keyboard, MICR, barcode scanning, image
scanning, voice recognition, and optical mark readers. Construct a table describing
how each the technology can be used in an organisation, and its advantages and
disadvantages.
Technology Example Advantages Disadvantages
Manual keying Data entry Efficient for small Time consuming
personnel volumes of input Prone to error if
appropriate input
controls do not exist
MICR Cheques at banks Security benefits Different countries
Processing use different styles
efficiency of MICR fonts
Requires a special
magnetized ink
Not foolproof and
can be used for
fraud
Barcode scanning Supermarket Quick, efficient, No universal
checkouts, Airport accuracy of data standard for
baggage tracking, input barcodes
Mail delivery,
Freight control
Image scanning Capturing Captures images as Files can be large
documents well as text,
electronically Reduced paper
storage
Voice recognition Victoria case Human like Effect of accents
mentioned in the interaction and pronunciation
chapter on ability to
recognise inputs
Need to train the
system
Optical mark readers TAB, Uni exams Accuracy, speed of Requires
scanning, no need standardised input
for data validation forms, specialised
software and
specialised scanning
devices
© John Wiley and Sons Australia, Ltd 2013 3.3
to accompany
Accounting Information
Systems 4e
Brett Considine, Alison Parkes, Karin
Olesen, Yvette Blount & Derek Speer
Prepared by
Brett Considine
John Wiley & Sons Australia, Ltd 2013
, Chapter 3: Database concepts I
Chapter 1: Introduction
Discussion Questions
1.1 Describe some inputs, processes and outputs of an accounting information system.
(LO1, LO2, LO3)
Inputs: Sales order (record purchase requests from customers), purchase data (data about
purchases initiated with our vendors), Receiving data (data about arriving goods), shipping data
(data about goods sent to customers), invoices (received from vendors)
Processes: Check data is valid, sort data, manipulate data
Outputs: Invoice (sent to customer), cheque (sent to vendor), profit and loss report, accounts
receivable report
1.2 What is the difference between data and information? (LO2)
Data are the raw facts relating to or describing an event. For example, data relating to a sale
could include the customer‘s name, address, salesperson ID, the sale number, sale date, items
purchased, quantity purchased and so on. On its own this data is not all that useful. However,
through the application of rules and knowledge the data can be made meaningful, thus converting
it to information. For example, the collection of data relating to sales may be summarised into
sales by customer or sales by product, to provide information about high spending customers or
slow moving products.
1.3 What is information overload? What are its consequences? (LO2)
Information overload refers to the situation where an individual has more information than
required and can‘t meaningfully process this information when making a decision. The potential
consequences of information overload include the production of reports and information that
serves no purpose and deleterious decision making by employees who are unable to synthesise
the volume of information that they are exposed to.
1.4 Briefly summarise the changing relationship between accounting and information
systems. (LO4)
This question can be answered with reference to Figure 1.5, which depicts the changing nature of
and interaction between accounting and information systems. Regarding the role of accounting
we see that initially accounting was the primary source of information for an organisation. In the
original manual accounting environment, the people who did the accounting also represented the
technology of the system – the accountant kept records and stored data and synthesised it into
reports. In essence, the accounting function and the information technology function were one.
The advent of computing technology and other processing technologies described in the chapter
were based around ways of making the accounting task easier. When the information technology
first hit organisations it was predominantly seen as a way of helping the accountant – thus
information systems were the domain of the accountant. This is represented in the top part of
figure 1.5. The domain of information technology soon expanded, encompassing more than just
© John Wiley and Sons Australia, Ltd 2013 3.1
,Solution Manual to accompany Accounting Information Systems 4e
accounting. As a consequence, we have the scenario depicted with the intersecting circles in
figure 1.5. With the growth of information systems, the traditional roles of data management and
storage that were previously the domain of the accountant began to be consumed by the
information systems domain, with the accounting function being separate from the technology
that allowed its execution. Finally, technology was incorporated to many areas of the
organisation, not just the accounting role. The technology/information systems role became the
focus, and it served many areas of the business, of which accounting was one. Thus accounting
became a user of the information systems function in order to complete its tasks. Thus
accounting has gone from being in control of the information systems function to being a user of
the information systems function as technology has advanced and it has become necessary for
people to be experts in technology.
1.5 Compare the role of the accountant today to his or her role before the introduction
of computer technology. How have the responsibilities and duties changed over
time? (LO4)
The discussion of this question can be tied into the discussion in question 1.4. What becomes
evident from the historical discussion of the evolution of the accounting and information systems
function is that the accountant has gone from being responsible for both the accounting function
and the information management function associated with accounting to just being responsible
for the accounting function. The technically qualified personnel, who do not necessarily have
accounting skills, have become responsible for the information storage function associated with
accounting. In a sense, the responsibilities of the accountant have been reduced, since they have
lost direct control of the information storage function associated with the accounting discipline.
Some may also argue that this shift has created a greater need for accountants to be trained not
just in the technical skills of accounting but also in skills of information management, for
example information systems.
1.6 What are some of the uses of accounting information? Provide five examples of how
accounting information may be used and who it would be used by. (LO5)
The table below provides some typical examples of how accounting information may be used.
USER USES OF ACCOUNTING INFORMATION
Shareholder Uses the general purpose financial reports to assess the performance of
the company they have invested in, assessing both historical
performance and using the historical information to make predictions
about future performance.
Managers Are commonly exposed to bonus schemes that are based on profit
levels or other financial performance indicators. Thus managers have
accounting information being used as a performance assessment
device.
Union May use financial reports of companies – particularly profit
information – to substantiate claims for higher wages for union
members.
Bank Will look at financial performance and financial position information
when assessing credit worthiness of loan applicants.
Suppliers A company‘s suppliers may wish to view financial information before
entering in to long term supply agreements, in order to ensure that the
company is able to meet the terms of the agreement and pay for the
supplies that are purchased.
© John Wiley and Sons Australia, Ltd 2013 3.2
, Chapter 3: Database concepts I
Problems
1.1 Conduct a web search and find an example of each of the following data input
techniques: manual keying via a keyboard, MICR, barcode scanning, image
scanning, voice recognition, and optical mark readers. Construct a table describing
how each the technology can be used in an organisation, and its advantages and
disadvantages.
Technology Example Advantages Disadvantages
Manual keying Data entry Efficient for small Time consuming
personnel volumes of input Prone to error if
appropriate input
controls do not exist
MICR Cheques at banks Security benefits Different countries
Processing use different styles
efficiency of MICR fonts
Requires a special
magnetized ink
Not foolproof and
can be used for
fraud
Barcode scanning Supermarket Quick, efficient, No universal
checkouts, Airport accuracy of data standard for
baggage tracking, input barcodes
Mail delivery,
Freight control
Image scanning Capturing Captures images as Files can be large
documents well as text,
electronically Reduced paper
storage
Voice recognition Victoria case Human like Effect of accents
mentioned in the interaction and pronunciation
chapter on ability to
recognise inputs
Need to train the
system
Optical mark readers TAB, Uni exams Accuracy, speed of Requires
scanning, no need standardised input
for data validation forms, specialised
software and
specialised scanning
devices
© John Wiley and Sons Australia, Ltd 2013 3.3
