Accounting Information Systems 3rd Edition by Vernon Richardson Solution manual
Chapter 1 – Accounting Information Systems and Firm Value
Multiple Choice Questions
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Discussion Questions
How would an AIS help a company identify the products with the highest profit margin?
Accounting information systems keep track of the revenues and the costs of each product.If the information is reliable, exhibiting the faithful representation qualities, AIS can compute the highest profit margin and highest profit margin percentages.This will help the company know how best to grow its profits, potentially by increasing sales of the products with highest profit margins and perhaps deemphasizing those of lowest profit margin.
Brainstorm a list of discretionary information that might be an output of an accounting information system and be needed by Starbucks. Prioritize which items might be most important and provide support.
Answers will vary. Here are some potential answers:
The cost of a cup of coffee, by type: Breakfast blend, Cafe estima, caffe Verona, espresso roast, Ethiopia sidamo, French roast, Gold Coast blend, Guatemala Antigua, house blend, Italian roast, Kenya coffee, komodo dragon blend, organic Serena blend, organic shade grown Mexico, Sumatra, decaf caffe Verona, decaf espresso roast, decaf house blend, and decaf Sumatra!
Monthly Sales per square foot of retail space.
Employee cost for each operating hour.
Advertising expenditures per dollar of sales.
The cost of condiments per dollar sales of coffee. Condiments might include sweeteners, liquid creamers, cream canisters, sugar packets, sugar canisters, stir sticks!
The cost of electricity per operating hour each month of the year.
Explain the information value chain. How do business events turn into data then into information and then into knowledge? Give an example starting with the business event of the purchase of a Super Smash Bros. Nintendo Switch Game at GameStop all the way to giving useful information for the CEO and other decision makers.
The information value chain represents the overall transformation from a business need and business event (like each individual sale of U.S. flag) to an ultimate decision.The information value chain might be represented considering the purchase of a Nintendo Switch Game at Best Buy in the following way:
The game will be recorded as sales revenue and then after deducting its costs will add to or subtract from corporate income.The cash from the game sale will also add to the operating cash flows.
The specific game will be recorded in the information as a sale to monitor which games are selling within Best Buy.This will help Best Buy and its suppliers know which games are selling and which type of games should be reordered.The type of game will also help the marketing department better understand its customers and their respective demographic profile to better market to them.
In addition, knowing the location of the game sale will also help decision makers know where its sales are occurring.
The CEO can look at the profitability of games overall, the specific types of games that are selling and the location of those sales all due to the information value chain.
Give three examples of types of discretionary information at your college or university and explain how the benefits of receiving that information outweigh the costs.
Answers will vary.The following representspotential answers:
Universities are often interested in their freshmen retention (the percentage of sophomores that return after their freshman year).They also quite interested in their four- or five-year graduation rates.
Universities are also interested in their production of research grants.This is often used to monitor the success of their research and their ability to get interested sponsors (such as the National Institute of Health or the National Science Foundation).
Information for each of these three examples can be gained by the information system at the university.However, a university generic information system does not usually offer this information as a standard report or standard output of the system.Therefore, work must be done to capture (and potentially digitize) this information, ensure its validity and then report it in an appropriate useful format.The cost of getting useful information will depend on the university and its technology.However, since these represent three keys metrics of a university and will likely be used as a key input to manage the university, the benefits will potentially outweigh those costs.
After a NCAA women’s basketball game, a box score is produced detailing the number of points scored, assists made and rebounds retrieved (among other statistics). Using the characteristics of useful information discussed at the beginning of the chapter, please explain how this box score meets (or does not meet) the characteristics of useful information.
Multiple Choice Questions
c
a
a
c
d
b
d
a
d
a
a
c
b
d
a
Discussion Questions
How would an AIS help a company identify the products with the highest profit margin?
Accounting information systems keep track of the revenues and the costs of each product.If the information is reliable, exhibiting the faithful representation qualities, AIS can compute the highest profit margin and highest profit margin percentages.This will help the company know how best to grow its profits, potentially by increasing sales of the products with highest profit margins and perhaps deemphasizing those of lowest profit margin.
Brainstorm a list of discretionary information that might be an output of an accounting information system and be needed by Starbucks. Prioritize which items might be most important and provide support.
Answers will vary. Here are some potential answers:
The cost of a cup of coffee, by type: Breakfast blend, Cafe estima, caffe Verona, espresso roast, Ethiopia sidamo, French roast, Gold Coast blend, Guatemala Antigua, house blend, Italian roast, Kenya coffee, komodo dragon blend, organic Serena blend, organic shade grown Mexico, Sumatra, decaf caffe Verona, decaf espresso roast, decaf house blend, and decaf Sumatra!
Monthly Sales per square foot of retail space.
Employee cost for each operating hour.
Advertising expenditures per dollar of sales.
The cost of condiments per dollar sales of coffee. Condiments might include sweeteners, liquid creamers, cream canisters, sugar packets, sugar canisters, stir sticks!
The cost of electricity per operating hour each month of the year.
Explain the information value chain. How do business events turn into data then into information and then into knowledge? Give an example starting with the business event of the purchase of a Super Smash Bros. Nintendo Switch Game at GameStop all the way to giving useful information for the CEO and other decision makers.
The information value chain represents the overall transformation from a business need and business event (like each individual sale of U.S. flag) to an ultimate decision.The information value chain might be represented considering the purchase of a Nintendo Switch Game at Best Buy in the following way:
The game will be recorded as sales revenue and then after deducting its costs will add to or subtract from corporate income.The cash from the game sale will also add to the operating cash flows.
The specific game will be recorded in the information as a sale to monitor which games are selling within Best Buy.This will help Best Buy and its suppliers know which games are selling and which type of games should be reordered.The type of game will also help the marketing department better understand its customers and their respective demographic profile to better market to them.
In addition, knowing the location of the game sale will also help decision makers know where its sales are occurring.
The CEO can look at the profitability of games overall, the specific types of games that are selling and the location of those sales all due to the information value chain.
Give three examples of types of discretionary information at your college or university and explain how the benefits of receiving that information outweigh the costs.
Answers will vary.The following representspotential answers:
Universities are often interested in their freshmen retention (the percentage of sophomores that return after their freshman year).They also quite interested in their four- or five-year graduation rates.
Universities are also interested in their production of research grants.This is often used to monitor the success of their research and their ability to get interested sponsors (such as the National Institute of Health or the National Science Foundation).
Information for each of these three examples can be gained by the information system at the university.However, a university generic information system does not usually offer this information as a standard report or standard output of the system.Therefore, work must be done to capture (and potentially digitize) this information, ensure its validity and then report it in an appropriate useful format.The cost of getting useful information will depend on the university and its technology.However, since these represent three keys metrics of a university and will likely be used as a key input to manage the university, the benefits will potentially outweigh those costs.
After a NCAA women’s basketball game, a box score is produced detailing the number of points scored, assists made and rebounds retrieved (among other statistics). Using the characteristics of useful information discussed at the beginning of the chapter, please explain how this box score meets (or does not meet) the characteristics of useful information.