End of Chapter Solutions Manual: Richardson, Chang, Smith, Accounting Information Systems, 4th edition
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Chapter 1: Accounting InformationSystems andFirm Value
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Multiple Choice Questions f f
1. (LO 1-1) Accounting information systems
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a. are always computerized. f f
b. report only financially related information. f f f f
c. are information systems that record, process, and report on transactions to provide
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financial and nonfinancial information for decision making and control.
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d. require a CITP designation to understand. f f f f f
Answer: C f
2. (LO 1-1) Which of the following is a characteristic of relevance?
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a. Materiality
b. Timeliness
c. Verifiable
d. Cost to generate f f
f Answer: A f
3. (LO 1-2) Which of the following is considered to be mandatory information required by a
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regulatory body?
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a. 10-Q submission to the Securities and Exchange Commission
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b. The cost to produce a Samsung Galaxy
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c. The number of organic bananas that are sold at Whole Foods on July 28
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d. The cost to build an all-new Starbucks restaurant in Shenzhen, China
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f Answer: A f
4. (LO 1-4) The correct order of events in the value chain is
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a. Inbound logistics ➛ Operations ➛ Service. f f f f f
b. Inbound logistics ➛ Outbound logistics ➛ Marketing and sales.
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c. Inbound logistics ➛ Operations ➛ Outbound logistics. f f f f f f
d. Inbound logistics ➛ Operations ➛ Marketing and Sales. f f f f f f f
Answer: C f
5. (LO 1-8) Which system contributes information on direct labor to a cost accounting system?
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a. Supply chain management system (SCMS)
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b. Financial reporting system (FRS) f f f
c. Customer Relational Management System (CRM) f f f f
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, End of Chapter Solutions Manual: Richardson, Chang, Smith, Accounting Information Systems, 4th edition
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d. Human resource management system (HRMS) f f f f
f Answer: D f
6. (LO 1-7) A supply chain
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a. supplies jewelry chains. f f
b. refers to the flow of materials, information, payments, and services.
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c. is similar in function and purpose to the value chain.
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d. does not apply to a service firm like an accounting firm.
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Answer: B f
7. (LO 1-7) Customer relationship management software does not include information about
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a. current customers. f
b. prospective customers. f
c. former customers. f
d. current employees. f
Answer: D f
8. (LO 1-6) An information system that measures and records accounting transactions and
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reports them in the financial statements is called a
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a. financial reporting system (FRS). f f f
b. enterprise system (ES). f f
c. manufacturing system (MS). f f
d. cost accounting system. f f
Answer: A f
9. (LO 1-3) What is the name of the position for a person responsible for determining
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Information needs of a business and designing a system to meet those needs?
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a. Chief information officer f f
b. Controller
c. IT auditor f
d. Systems analyst f
f Answer: D f
10. (LO 1-9) The balance sheet account most likely affected by an AIS investment in supply
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chain management software would be
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a. inventories.
b. fixed assets. f
c. cash and cash equivalents. f f f
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, End of Chapter Solutions Manual: Richardson, Chang, Smith, Accounting Information Systems, 4th edition
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d. unearned revenue. f
Answer: A f
11. (LO 1-7) The software/system that helps make sure the retail firm doesn’t have a stockout is
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a. supply chain management software. f f f
b. customer relationship management software. f f f
c. enterprise systems. f
d. human resource systems. f f
Answer: A f
12. (LO 1-9) Data analytics performed to identify the most profitable customers would be
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most likely to affect which income statement account?
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a. Selling, general, and administrative expenses (SG&A) f f f f f
b. Interest expense f
c. Revenues
d. Cost of goods sold f f f
f Answer: C f
13. (LO 1-7, LO 1-9) Customer relationship management systems would generally be considered to
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be an
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a. internal business process. f f
b. external business process. f f
c. interior business process. f f
d. exterior business process. f f
Answer: B f
14. (LO 1-3) An auditor testing internal controls would generally be considered to fill which
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role with respect to accounting information systems?
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a. User
b. Manager
c. Designer
d. Evaluator
Answer: D
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15. (LO 1-2) Which of these represents the proper transformation from data to decision
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according to the information value chain?
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a. Data ➛ Information ➛ Knowledge ➛ Decision
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b. Data ➛ Knowledge ➛ Information ➛ Decisionf f f f f f
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, End of Chapter Solutions Manual: Richardson, Chang, Smith, Accounting Information Systems, 4th edition
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c. Data ➛ Business event ➛ Information ➛ Decision
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d. Data ➛ Analysis ➛ Information ➛ Decision
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f Answer: A f
Discussion Questions f
1. Brainstorm a list of discretionary information that might be an output of an accounting
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information system and be needed by Starbucks. Prioritize which items might be most
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important and provide support.
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Answers will vary. Here are some potential answers:
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The cost of a cup of coffee, by type: Breakfast blend, Cafe estima, caffe Verona, espresso roast,
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fEthiopia f sidamo, f French f roast, f Gold f Coast f blend, f Guatemala f Antigua, f house f blend, f Italian
froast, f Kenya f coffee, f komodo f dragon f blend, f organic f Serena f blend, f organic f shade f grown
fMexico, fSumatra, fdecaf fcaffe fVerona, fdecaf fespresso froast, fdecaf fhouse fblend, fand fdecaf
fSumatra!
Monthly Sales per square foot of retail space. f f f f f f f
f Employee cost for each operating hour. f f f f f
Advertising expenditures per dollar of sales. f f f f f
The cost of condiments per dollar sales of coffee. Condiments might include sweeteners, liquid
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creamers, cream canisters, sugar packets, sugar canisters, stir sticks!
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The cost of electricity per operating hour each month of the year.
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2. Explain the information value chain. How do business events turn into data then into
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information and then into knowledge? Give an example starting with the business event of the
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purchase of a Super Smash Bros. Nintendo Switch Game at GameStop all the way to giving
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useful information for the CEO and other decision makers.
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The information value chain represents the overall transformation from a business need and
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business event (like each individual sale of U.S. flag) to an ultimate decision. The information
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value chain might be represented considering the purchase of a Nintendo Switch Game at Best Buy
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in the following way:
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The game will be recorded as sales revenue and then after deducting its costs will add to or
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subtract from corporate income. The cash from the game sale will also add to the operating cash
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flows.
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