Solution Manual for Accounting Information Systems: The Processes and Controls , 2nd Edition

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Chapter 1 SolutionsIntroduction to AISPage 1-1Turner/Accounting Information Systems, 2eSolutions ManualChapter1Concept Check1.d2.d3.b4.c5.c6.c7.b8.b9.b10.aDiscussion Questions11.(SO 1)How might the sales and cash collection processes ataWal-Martstoredifferfrom the salesand cash collectionprocesses at McDonald’s?Wal-Mart sells itemsthat are pre-priced and bar coded with that price. Therefore the cash registers atWal-Mart use bar code scanners. However, McDonalds sells fast foods thatarenotbar coded. The cash registers at McDonalds use touch screen systemsthat requirea cashier to indicate the items purchased.The cash collection processes are notdifferent. In both cases, the employee collects the cash or credit card, and returnsany change.12.(SO 1)Can you think of any procedures in place at McDonald’s that are intended toensure the accuracy of your order?Student responses may vary, however,following are a few examples:Often, at either the drive-through or the inside cashregister, the customer can see a screen that displays the items ordered. In addition,a fast food restaurant uses pre-designed slots to hold certain types ofmenu items.When a customer orders aparticularsandwich, the person filling the order knowsexactly which slot to pull the sandwich from.Each customer receives a printedreceipt with the items listed and the customer can verify the accuracy.13.(SO 1)How might the salesand cash collectionprocessesat BoeingCo.(maker ofcommercial passenger jets) differ from the salesand cash collectionprocesses at

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Chapter 1 SolutionsIntroduction to AISPage 1-2McDonald’s?Boeing does notsell to end-user consumers; rather, it sellstocompanies such as airlines. Therefore Boeing does not have stores, nor inventoryin stores, nor cash registers to process sales. Boeing is more likely to maintain asales force that visits potential customers to solicit sales. Those sales may beentered by the salesperson into a laptop computer connectedtoBoeing’s network.McDonald’s, on the other hand, sells to consumers, uses order input touch screensat each location, and maintains supplies of perishable food products.14.(SO 1)Are there business processes that do not in some way affect accountingrecords or financial statements?There may be processes that do not directly affectaccounting records(such as recruiting and hiring a new employee), but allprocesses have a direct or indirect affect on accounting records. All processes useresources such as material or employee time. Therefore, all processeshaveexpenses related to those processesthat will affect the accounting records.15.(SO 2)Briefly describe the five components of an accounting information system.1.Work steps within a business process that capture accounting data as thebusiness process occurs.2.Manual or computer-based records thatcapturethe accounting data fromthe business processes.3.Internal controls within the business process that safeguard assets andensure accuracy and completeness of the data.4.Work steps that process, classify, summarize, and consolidate the rawaccounting data.5.Work steps that generate both internal and external reports.16.(SO 2)Describe how sales data arecaptured and recorded at a restaurant such asApplebee’s.AtmostApplebee’srestaurants, a serverwrites the order on a pad andcarries that pad to a cash register. The server enters the order on a touch screenterminal. The order information is then displayed on a terminal in the kitchen. Whenthe customer has finished the meal, the server prints a check and delivers the checkto the table. The customer pays the server by using cash or a credit card. Theserver processes the payment on the touch screen register and returns the changeor credit card slip to the customer.17.(SO 2)What occurs in an accounting information system that classifies accountingtransactions?For each business process that affects accounting records, theaccounting information system must capture any resulting accounting data, recordthe data, process it through classification, summarization, and consolidation, andgenerate appropriate reports.18.(SO 2)What are the differences between internal reports and external reportsgenerated by the accounting information system?Internal reports are used bymanagement to oversee and direct processes within the organization. Externalreports are the financial statements used by investors and creditorsto make

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Chapter 1 SolutionsIntroduction to AISPage 1-3decisions about investing or extending credit to the organization.19.(SO 3)What types of businesses are in the supply chain of an automobilemanufacturer?The types of businesses in an automaker’s supply chain are oftenmanufacturers of parts used in cars. Thiswould includemanufacturers oftires,batteries, steel, plastic, vinyl andleather, as well asmanyothermanufacturersmaking the thousands of parts in a car.20.(SO 3)When a company evaluates a supplier of materials, what kinds ofcharacteristics mightbeevaluated?Thesupplier’s characteristics thatare likely tobeevaluated includepriceand payment terms, quality, reliabilityof the materials,aswell as whether the supplier can deliver materials when needed.21.(SO 3)How do you thinka companymay be abletoinfluencea supplier to meet itsbusiness processingrequirements?A company may be able to influence a supplierby choosing only suppliers that meet expectations regarding the terms of price,quality, and delivery timing. Those suppliers that do not meet these expectationsmay not be used in the future. This exerts some influence over suppliers, as thesuppliers will lose business if they do notmeetthe buyer’srequirements.22.(SO 4)Describe any IT enablement that you have noticed at a large retail store suchas Wal-Mart or Target.The most noticeable IT enablement is the use of bar codedsystems on the products andhow they are read bythe cash registers.23.(SO 4)How do you think the World Wide Web (WWW) has led to business processreengineering at companies such as Lands End or J.Crew?Prior to the World WideWeb, customers placed orders either on the phone or by mail. Both phone and mailorders requireemployeesto take the order and enter it into the computer system.Using online sales,customersentertheirown ordersand nocompanypersonnel areneeded to key orders into the computer system. Therefore, there was a majorchange in the number of people employed to key orders.24.(SO 4)What two kinds of efficiency improvement result from business processreengineering in conjunction with IT systems?The use of IT systems usually leadsto two kinds of efficiency improvements. First, the underlying processes arereengineered(through rethinking and redesign)to be conducted more efficiently.Second, the IT systems improve theefficiency of the underlying processes.25.(SO 5)Explain the differences between a field,arecord, andafile.A field is one setof characters that make up a single data item. For example, last name would be afield in a customer database. A record is a collection of related fields for a singleentity. For example, last name, first name, address, phone number, and credit cardnumber fields might make up a single customer record. A file is acollection ofsimilar records.For example, all customer records togethermake upa customer file.

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Chapter 1 SolutionsIntroduction to AISPage 1-426.(SO 5)Explain why random access files would be preferable to sequential accessfileswhenpayroll personnel arechanging a pay rate for a single employee.Whenthe desired action is to access a single record, random access is preferable. Ifsequential access storageisused, all records must be read in sequenceuntil thedesired record is reached.On the other hand, random access allows asingle recordto be accessed without the necessity of reading other records. This makes it moreefficientto access aparticularemployee record to change the pay rate.27.(SO 5)Why do real-time systems require direct access files?If transactions are tobe processed online and in real-time, it is necessary that the computer access asingle record immediately.Thus,direct access filesare required so the records canbe accessed in real-time.28.(SO 5)Why isdata contained in the data warehouse called nonvolatile?Each timea new transaction is completed, parts of the operational data must be updated.Therefore, the operational database is volatile–withconstantly changinginformation. However, the data warehouse does not change with each transaction.The data warehouse is only changed when periodic updatesoccur. The data in thedata warehouse arenonvolatilebecausethey donot change constantly.29.(SO 5)How isan extranet different from the Internet?The extranet allows accessonly toselected outsiders, while the Internet is open to an unlimited number ofoutsiders (essentially anyone having access to the Internet).On the other hand,extranetsare typicallyused by companies to interact withspecificsuppliers andcustomerswho have been granted access to a company’snetwork.30.(SO 6)Prepare a list of the types of businessesthat you have been in that use pointof sale systems.Student responses may vary, but would likelyincludedepartmentstores,grocery stores,specialty stores, restaurants,gas stations,and car washes.31.(SO 6)What do you think would be the advantages of an e-payables system over atraditional system that uses paper purchase orders and invoices?An e-payablessystem should be faster and more efficient than a paper-based system. In addition,fewerprocessingerrorsshould be expected from an e-payablessystem.32.(SO 7)Describe why enterprise risk management is important.All organizationsface risks and Enterprise Risk Management (ERM) assists managersin reducingand controlling risk.ERMalso involves personnel across the entire businessorganization, as they implement strategies to achieve the organization’s objectives.33.(SO 7)What is the difference between general controls and application controls?General controlsapply overall to the IT accounting system. They are controls thatare not restricted to any particular accounting application. An example of a generalcontrol is the use of passwords to allow only authorized users to log into an IT-basedaccounting system.Application controlsare used specifically in accountingapplications to control inputs, processing, and output. Application controls are

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Chapter 1 SolutionsIntroduction to AISPage 1-5intended to insure that inputs are accurate and complete, processing is accurate andcomplete, and that outputs are properly distributed, controlled, and disposed.34.(SO 7)In what way is a code of ethics beneficial to an organization?If topmanagement institutes a code of ethics and emphasizes this code bymodeling itsprinciples anddisciplining or discharging those who violate the code, it can helpreduce unethical behavior in the organization.35.(SO 8)Whatrolesdoaccountants have in relation to the accounting informationsystem?Accountants are users of the AIS, they assist in the design of the AIS, andthey are auditors of the AIS.Brief Exercises36.(SO 1)For each category of business processes (revenue, expenditure, conversion,administrative), give an example of a business process.Student responses are likelyto vary greatly, as they may refer to any of the subprocesses within each category.For example, the revenue processes include sales, sales returns, and cashcollections; the expenditure processes include purchasing, purchase returns, cashdisbursements, payroll,and fixed asset processes; the conversion processes includeplanning, resource management, and logistics; administrative processes includecapital processes, investments, and general ledger processes. Accordingly, anytype of business process can be cited to answer this question, but the student mustmatch theexamplewith the appropriate process.37.(SO 2)Think of a company that you have worked foror with which you have donebusiness. Which departments within the company need reports generated by theaccounting information systems?Student responses are likely to vary greatly, asnearly every department within a business organization uses reports generated bythe accounting information systems. For example, sales departments need customeraccount information to help in their efforts to sell products to customers. Purchasingdepartmentsneed product information to help in their efforts to purchase productsneeded in the business.These types of information aremaintained in accountinginformation systems. There are numerous additional examples that could apply.38.(SO 3)Explain a supply chain linkage and give an example.A supply chain linkageis the connection of activities in the supply chain, includingthe entities, processes,and information flows that involve the movement of materials, funds, and relatedinformation through the full logistics process–fromthe acquisition of raw materialsto the delivery of finished products to the end user. It therefore includes the linkedactivities of vendors, service providers, customers, and intermediaries.In addition tothe example of McDonald’s buns given in the text, anotherexample would be a shirtsold by the Gap. The Gap’s supply chain linkage would likely include a supplier fromwhom the shirt was purchased, a manufacturer who assembled and sewed the shirt,

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Chapter 1 SolutionsIntroduction to AISPage 1-6a secondary supplier thatprovided the fabric from which the shirt was constructed,and a farmer who raised cotton used to make the fabric.39.(SO 4)Explain how business process reengineering occurs. Also, explain how itdiffers from the typical changes in company policies.With business processreengineering(BPR), the underlyingbusinessprocesses are reengineeredto beconducted more efficiently.In other words, a comprehensive rethinking andredesign takes place in order to enhance performance of the process. A keycomponentof BPR is the leveraging of ITcapabilities to improveprocessefficiencies. BPR differs from typically organizational change in that it involves“thinking outside the box” in order to offer completely new and improved methods forbusiness processes.40.(SO 5)For an accounts receivable system, what kind of data would be found in themaster files and transaction files,respectively?An accounts receivable master filewould include relatively permanent data necessary to process customertransactions. This would include a record for each customer.The data in themaster file would likely include customer name,address, phone numbers, creditlimit, and current balance.A transaction filefor accounts receivablewould containthe relatively temporarydatathat must be processed to update the master file, suchas details from individual salesand cash collectiontransactions from customers.41.(SO 5)Describe the differences in thefollowingthree types of processing:a.Batch processinginvolves the grouping of similar transactions to be processedtogether;b.Online processinginvolves processing individual transactions, one-at-a-time; andc.Real-time processingis an online processing method that involves the immediateprocessing of individual transactions.42.(SO 5)The networks discussed in this chapter were LANs, Internet, intranet, andextranet. Explain each.A LAN is a computer network that spans a relatively smallarea such as a building or group of buildings within a business organization. TheInternet is the global computer network made up of millions upon millions ofcomputers and subnetworks throughout the world. An intranet is an organization’sprivate computer network, accessible only by employees of that organization toshare data and manage projects. An extranet is an expansion of an intranet thatallows limited access to designated outsiders such as customers and suppliers.43.(SO 7)Give a brief summary of each of the following:a.enterpriserisk managementis an ongoing strategy-setting and risk assessmentprocess that is effected by top management but involves personnel across theentire entity.b.corporate governanceis an elaborate system of checks and balances whereby acompany’s leadership is held accountable for building shareholder value andcreating confidence in the financial reporting process.

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Chapter 1 SolutionsIntroduction to AISPage 1-7c.IT governanceis the corporate governance process that applies specifically tothe proper management, control, and use of IT systems.44.(SO 9)Describewhyaccountants should be concerned about ethics.Accountantsshould be concerned about ethics because accounting information systems areoften the tools used to commit or cover up unethical behavior. Accountants need tobe aware of the possibility of fraud within theAIS so that they can help develop andimplementeffective internal controls to reduce the risk of such unethical acts. Inaddition, accountants need to be prepared to resist the temptation to commitunethical acts and to avoid being coerced into assisting with a fraudulent cover-up.45.(SO 9)Kelli Droyeris currently pursuing her accounting degree atBromfeldUniversity. She has excelled in each of her major courses to date; however, shetendstostruggleinher computer classes and with assignments requiring use ofcomputer technology. Nevertheless,Kelliconfidently claims that she will become anexcellent accountant. Comment on the practical and ethical implications of herposition.Kelliis mistaken in herpositionfor the following reasons:Practically speaking, accountantsneed to be well-informed about the operationof accounting information systems, which nearly always involve computertechnology. The AIS is the foundation of most accounting functions, so to resistcomputer technology would be unreasonable, if not impossible. Also, in order toassist in developing internal controls, accountants must understand theprocesses within the AIS, including the use of technology,so that effectivecontrols can be developedand implementedto reduce risks.Ethically speaking,accountants need to be well-informed about the operation ofthe AIS so that they are poised to recognize fraud and errors that may occur.Without an understanding of the underlying technology, accountants would beunable to effectively capture and monitor business processes. Rather thanfulfilling her responsibility as an accountant to develop and implement internalcontrols,Kelli’s ignorance ofthe AIS could actually allowfraud to be perpetratedwithout being prevented or detected.For these reasons,Kelli’sviewpointis quite dangerous.Problems46.(SO 2)If an accounting information system wereentirely a manual system (nocomputers used), explain how data would be captured, recorded, classified,summarized, and reported.Discuss how the sophistication of the company’scomputer system impacts the accounting output and, alternatively, how therequirements for accounting outputs impact the design of the accounting informationsystem.In a manual accounting information system, data would be captured onsource documents and recorded by hand in subledgersor special journals. Accountclassifications would be determined by the accountants responsible for recording thetransaction. The accountants would perform mathematical computations tosummarize the records and post them to a general ledger. The general ledgerwould be manually summarized at the end of the period so that financial statements

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Chapter 1 SolutionsIntroduction to AISPage 1-8could be prepared. The financial reports would be manually compiled based on theending general ledger balances. Since a great deal of paper and human processingare required for a manual system,itisprone to error.More sophisticated, computer-based systems tend to produce more output that is more accurate because they areprogrammed to process data consistently. They also use programming to performmathematical computations, which promotes accuracy and time savings. Therefore,IT usage to support business processes results inincreased accuracy, increasedefficiency, and reduced costs.The requirements for accounting outputs impactthedesign of the AIS. Worksteps within a business process can be designed to capture data in a manner that isconsistent with the desired content and format of the related output. This promotesefficiency and effectiveness of the overall process. When business processreengineering is used to design business processes, IT systems can be introducedto take advantage of the speed and efficiency of computers to enhance the AIS.47.(SO 1,3)Classify each of the following processesas eitherarevenue process,expenditure process, conversion process, or administrative process:a.Selling common stock to raise capital-ADMINISTRATIVEb.Purchasing electronic components to manufacture DVD players-EXPENDITUREc.Moving electronic components from the stockroom to the production floor tobegin making DVD players-CONVERSIONd.Paying employees at the end of a payroll period-EXPENDITUREe.Preparing financial statements-ADMINISTRATIVEf.Receiving cash payments from customers-REVENUEg.Buying fixed assets-EXPENDITUREh.Moving manufactured DVD players from the production floor to the warehouse-CONVERSION48.(SO 1)Business processes are composed of three common stages: an initial event,a beginning, and an end. Foritemsa through hlistedin Problem 47, identify theapplicable initial event, beginning, and end of the process.Student responses mayvary as their experiences are likely to be different. Different businesses may havedifferent events that trigger these processes; however, the following are commonexamples:a.Selling common stock to raise capital: Initial Event–Contacting andcommunicating with investors; Beginning–Receiving consideration frominvestor; End–Recording transactions in the accounting records.b.Purchasing electronic components to manufacture DVD players: Initial Event–Receiving a purchase request from operations personnel; Beginning–Placing anorder with a supplier; End–Recording the payment for the component parts.c.Moving electronic components from the stockroom to the production floor tobegin making DVD players: Initial Event–Receiving a request from theProduction department for the movement of materials; Beginning–Removing

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Chapter 1 SolutionsIntroduction to AISPage 1-9inventory from the stockroom; End–Recording the receipt of goods in theproduction area.d.Paying employees at the end of a payroll period: Initial Event–Receivinga timesheet or other recordof time worked; Beginning–Recording hours in the payrollrecords; End–Distributing paychecksor depositing paychecks in employeeaccounts.e.Preparing financial statements: Initial Event–Preparing end-of-period adjustingentries; Beginning–Summarizing adjusted account balances; End–Compilingdata in financial statement format and writing related disclosure notes.f.Receiving cash payments from customers: Initial Event–Communicating withcustomer about a sale;Beginning–Notifying customer of amounts owed relatedto the sale;End–Recording the receipt of cash and deposit in a bank account.g.Buying fixed assets: Initial Event–Planning for anexpenditure as part of acapital budgeting process;Beginning–Placing an order for the fixed asset;End–Receiving the asset and recording it in a subsidiary ledger.h.Moving manufactured DVD players from the production floor to the warehouse:Initial Event–Receiving notification from the Production department regardingcompletion of products;Beginning–Removing finished goods from theproduction floor;End–Recording the receipt of finished goods in the warehouse.49.(SO 1,2,7)Each of the points listed next represents an internal control that may beimplemented within a company’s accounting information system to reduce variousrisks. For each point, identify the appropriate business process (revenue,expenditure, conversion, administrative). In addition, refer to the description ofbusiness processes under Study Objective2in the chapter, and identify theappropriate subprocess. (Some subprocesses may be used more than once, andothers may not be used at all.)a.Customer credit mustbe authorized before a business transaction takes place.Revenueprocess, sales subprocessb.An authorized price list of goods for sale is provided.Revenue process, salessubprocessc.A shipping report is prepared for all shipments of goods so that customers maybe billed in a timely manner.Revenue process, sales subprocessd.Access to personnel files and paycheck records is available only in accordancewith management specifications.Expenditure process, payroll subprocesse.New vendors are required to be authorized before a business transaction takesplace.Expenditure process, purchasing subprocessf.Access to cash is restricted to those employees authorized by management.Revenue or Expenditure process, Cashcollection or cash disbursementsubprocess, respectivelyg.Costs of goods manufactured is properly summarized, classified, recorded, andreported.Conversion process,resource management subprocessh.Amounts due to vendors are reconciled by comparing company records withstatements received from the vendors.Expenditure process, cash disbursementssubprocess

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Chapter 1 SolutionsIntroduction to AISPage 1-10i.Employee wage rates and paycheck deductions must be authorized bymanagement.Expenditure process, payroll subprocessj.Specific procedures such as the performance of a background check are carriedout for all new employee hires.Expenditure process, payroll subprocessk.The purchasing manager is notified when stock levels are low so that items maybe restocked to prevent backorders.Conversion process,resource managementsubprocessl.Two signatures are required on checks for payments in excess of $5000.Expenditure process, cash disbursement subprocessm.When excess cash is on hand, the funds are invested in short-term securities.Administrative process, investment subprocessn.Goods received are inspected,andanydamaged or unmatched items arepromptly communicated to the vendor.Revenue process, sales subprocesso.The monthly bank statement is reconciled to the company’s cash records by anoutside accountant.Revenue or Expenditure process, Cash collection or cashdisbursementsubprocess, respectively50.(SO 3)Using an internet search engine,search for the terms“RFID”and “supplychain.” Put both of these terms in your search and be sure that“supply chain”is inquotation marks. Read some of the resulting web sites you find and answer thesequestions:a.What is RFID?Radio-frequency identification(RFID)technologyhelpscompanies identify and manage large lots of goods, typically received and storedin cartons or on skids. The cartons or skids include tags that are encoded withidentifying information about the items, their supplier, and their purchasetransaction. These tags can be instantly read and recorded by the companythrough the use of antennae or battery-operated transmittersand radio waves.b.How isRFIDrelated to the supply chain?RFID enhances supply chainmanagement bysignificantly reducing the time required to record purchasesandinventory tracking. The instantaneous reading of RFID tags allows the items tomove swiftly through the logistics process with increased speed and accuracy ofthe underlying records.c.How willRFIDimprove the accuracy of data from the supply chain?Accuracy isincreased by the use of tags containing company and product identifiers. Thesetags reduce the risk of recording items in duplicate. They also aid in inventorytracking through enhanced security of products being moved between locations.51.(SO 7)Go to the COSO web site andlocate the guidance on enterprise riskmanagement. The executive summary of the article “Enterprise Risk Management–Integrated Framework”can be downloaded at no cost.Read the sections titled“Roles and Responsibilities” and “Use of this Report.” Describe the roles thatvarious parties should play in enterprise risk management.Although everyone withina business entity has responsibility for its ERM processes, the chief executive officeris ultimately responsible and must assume ownership of the process.Accordingly,the CEO should bring together key managers from each functional area to plan,

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Chapter 1 SolutionsIntroduction to AISPage 1-11implement, and monitor the process.The board of directors should providenecessary oversightand maintain contact with top management, internal auditors,and external auditors regarding the ERM process. Other managers should supportthe organization’s philosophy, promote compliance with its risk appetite, andmanage risks within their areas of responsibility. The CFOand internal auditorstypically have a support role.External to the business organization, three groups are key to the effective use ofERM: regulators, professional organizations, and educators.Regulators areexpected to refer to the COSO framework in the development of expectations aswell as the conduct of their examinations for business organizations they oversee.Professional organizations should consider the COSO framework in thedevelopment of guidelines for financial management, auditing, and related topics.Educators are urged to incorporate the framework into university curricula, as well asto conduct research and analysis on potentialenhancements to the ERM process.52.(SO 9)Using an internet search engine,search for the term (in quotations) “earningsmanagement.”Fromthe items you read,answer the following questions:a.Is earnings management always criminal?No, earnings management is notalways illegal. Since accounting principles allow for some flexibility, accountantsmay use the discretion at their disposal in preparing financial statements.b.Is earnings management always unethical?No, earnings management is notalways unethical, due to themateriality constraint. Yetearnings managementbecomes unethical when it “crosses the line”toreflectmanagement’sdesiresrather than an accurate representation of the company’s financial performance.If earnings management deceives or distracts investors, it is unethical.53.(SO 9)Using an internet search engine,search for“HealthSouth”and“fraud”or“Scrushy”(thename of the company’sCEO). Explain the fraud that occurred atHealthSouthCorporation. What was the ultimate result of the prosecution ofHealthSouth officials?HealthSouth’s fraud was an elaborate earnings managementscheme whereby earnings were overstated by at least $1.4 billion. False revenueswere recorded with corresponding decreases in contra-revenue accounts, expenses,and/or liabilities and increases in assets.Ultimately,after a long and dramatic trial,Scrushy was acquittedof all criminal chargesdue to lack of evidence tying him tothe fraud.Cases54.Gas-Up &Go Mart and the accounting information system.1.Accounting data is likely to be captured at Gas-Up &Go at the gas pump if thecustomer uses a debit card or credit card to payfor a gas purchaseat the pump.Even if the customer chooses to pay inside, the information pertaining to the saleof gasoline is recorded at the pump. The snacks must be purchased inside thestore, but can be added to the gasoline charge. The accounting effect is that the

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Chapter 1 SolutionsIntroduction to AISPage 1-12sale and the paymentcollected should increase the Sales account and Cash orAccounts Receivable, respectively.2.The records that capturethe accounting data would be maintained within thecomputer system. Although a manual process is required to operate the gaspump and cash register, the remainder of the system is computer-based, so thesystem records the sale and all related data.3.Internal controls would include the security cameras in the store and gas fillingarea, as well as reconciliation procedures. Like the McDonalds’ example, amanager is likely to close and reconcile the cash register and gas pump sales atthe end of the day.4.The summarization of accounting data is likely to occur at the end of the periodwhen financial reports are prepared. These steps are probably accomplished bythe computer software.5.Financial reporting occurs at the end of the period, as data are summarized intoreports used for internal and external purposes. This likely includes acombination of manual and computerized processes. There are likely to beseparate classifications for the sales of gasoline versus snack items.55.Business processes and IT enablement at fast food restaurants.Student responsesmay vary, but are likely to consistent with the following:a.List and describe four different activities that are manual parts of businessprocesses at a restaurant such as Wendy’s.Manual processes are required to:greet customers at the drive-through window or counterentercustomer orders on the cash registertouch-screensprepare the foodgather the customer’s ordercollect paymentfrom the customerclean the dining arearefill the condiment dispensers, etc.reconcile the cash in the cash register to amounts included in the salessummariesb.List and describe four different activities that are IT enabled parts of businessprocesses at a restaurant such as Wendy’s.IT enables processes are used to:record customer orders input in the cash registers. The system accumulatessales data based on the orders transactedprepare sales amounts based upon the pre-programmed prices of itemsorderedand applicable tax ratesdetermine the amount of change due to customers based on the amount ofcash collectedprepare a sales receipt upon completion of a sales transactiontransfer order details to the food preparation stations so that the items can beprepared and assembledprepare a daily summary for each cash register at the end of the shift56.Business processes at department stores.

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Chapter 1 SolutionsIntroduction to AISPage 1-13a.Describe any necessary supporting processes that precede the sale of a productto you.Some of the supporting processes that precede a sale to a customerinclude acquiring, pricing and display of the merchandise, hiring and trainingsales personnel and cashiers, preparation of cash register drawers withadequate change, and programming the system to recognize the items whenthey are read by a bar code scanner.b.Describe any necessary supporting processes that occur after a sale to you.Some of the supporting processes that occur after a sale to a customer includehandling customer returns,summarization of the sales data, reconciling the cashregisters with the computerized data from the registers, preparation ofa bankdeposit, periodic sales reporting,andreconciliation ofthebank statements.57.Business processes at Culpe’s Cues Co.a.What are the business processes that apply to this business?The businessprocessesdescribed include the expenditure process involved in purchasingmaterials needed to manufacture pool cues and disbursing cash to suppliers formaterials purchased. The case also describes revenues processes for sales ofpool cues over the internet, customer collections, and sales returns(replacements). This business would also include subprocesses forpayrollexpenditures to pay James and Rebecca Culpefor their time worked, and fixedasset processes to handle any capital assets acquired (such the workshop, officespace, furniture and computers, tools and equipment, delivery vehicle, etc.). Inaddition, conversion processes would involve planning of the manufacturingprocess, planning and managing materials and resources needed for production,and logistics (movement of the manufactured goods through the productionprocessthroughdelivery to a customer).b.How would the business processes change if Culpe’s Cues expanded to aregional focus?IfCulpe’s Cues expanded to a regional focus, it is likely that itsbusiness would grow. James and Rebecca Culpemay have difficulty managinga regional business on their own, so they would likely need to hire and trainemployees to join their business. As more people became involved in thebusiness processes, they would need to determine how responsibilities would bedivided and how to implement internal controls in the processes.JamesCulpemay no longer be able to personally handle all deliveries. The company’swebsite mayalsoneed to be enhanced to handle the additional volumeanticipatedin connection with the business expansion.c.How would the business processes change if Culpe’s Cues began selling poolballs and other billiard equipment in addition to cues?IfCulpe’s Cues beganselling pool balls and other billiard equipment in addition to its pool cues, itsbusinessprocesses would change. If Culpe’s acquired this type of merchandise,it would have to enhance its expenditures processes to include the types ofsuppliers of these billiard accessories. It would also need to consider the logisticsof inventory storage. In addition, its revenue processes would need to beenhanced to differentiate sales of manufactured cues versus other billiardmerchandise. Its website would need to be updated to handle the additionalproduct lines.

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Chapter 1 SolutionsIntroduction to AISPage 1-14

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Chapter 2 SolutionsFoundational Concepts of the AISPage 2-1Turner/Accounting Information Systems, 2eSolutions ManualChapter2Concept Check1.d2.c3.b4.c5.a6.b7.b8.c9.c10.c11.b12.dDiscussion Questions13.(SO 1)What is the relationship between business processes and the accountinginformation system?As the systematic steps are undertaken within a businessprocesses, the corresponding data generated must be captured and recorded by theaccounting information system.14.(SO 1)Why is it sometimes necessary to change business processes when ITsystems are applied to business processes?When IT systems are applied tobusiness processes, some of the detailed transaction data may no longer be takenfrom paper-based source documents, and manual processing may no longer beneeded to summarize and post that data. Accordingly, some of the related manualsteps within the business process can be eliminated or changed.15.(SO2)Are manual systems and processes completely outdated?No, manualsystems and business processes are not completely outdated. Manual records andtasksmay still be involved in the business processes of even the largest and mostsophisticated accounting information systems.16.(SO2)What is the purpose of source documents?Source documents capture thekey data of a transaction, including date, purpose, entity, quantities, and dollaramounts.

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