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Pearson Accounting Information System Solution Manual Chapter 3

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Accounting information systems 13th ed .

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Accounting information systems 13th ed .

  1. 1. SOLUTION MANUAL FOR ACCOUNTING INFORMATION SYSTEMS (13TH EDITION) MARSHALL B. ROMNEY PAULJ.STEINBART To Get All Solved Question Click Downloading Link on page 4 CHAPTER 1 ACCOUNTING INFORMATION SYSTEMS: AN OVERVIEW SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 1.1 The value of information is the difference between the benefits realized from using that information and the costs of producing it. Would you, or any organization, ever produce information if its expected costs exceeded its benefits? If so, provide some examples. If not, why not? 1.2 Can the characteristics of useful information listed in Table 1-1 be met simultaneously? Or does achieving one mean sacrificing another? 1.3 You and a few of your classmates decided to become entrepreneurs. You came up with a great idea for a new mobile phone application that you think will make lots of money. Your business plan won second place in a local competition, and you are using the $10,000 prize to support yourselves as you start your company. 1.4 How do an organization's business processes and lines of business affect the design of its AIS? Give severalexamples of how differences among organizations are reflected in their AIS. 1.5 Figure 1-4 shows that organizational culture and the design of an AIS influence one another. What does this imply about the degree to which an innovative system developed by one company can be transferred to another company? 1.6 Figure 1-4 shows that developments in IT affect both an organization's strategy and the design of its AIS. How can a company determine whether it is spending too much, too little, or just enough on IT? 1.7 Apply the value chain concept to S&S. Explain how it would perform the various primary and support activities. 1.8 IT enables organizations to easily collect large amounts of information about employees. Discuss the following issues: 1.1 IT is continually changing the nature of accounting and the role of accountants. Write a two-page report describing what you think the nature of the accounting function and the accounting information system in a large company will be like in the year 2030. 1.2 Adapted from the CMA Examination
  2. 2. a. Identify and discuss the basic factors of communication that must be considered in the presentation of the annual report. b. Discuss the communication problems a corporation faces in preparing the annual report that result from the diversity of the users being addressed. c. Select two types of information found in an annual report, other than the financial statements and accompanying footnotes, and describe how they are helpful to the users of annual reports. d. Discuss at least two advantages and two disadvantages of stating well-defined corporate strategies in the annual report. e. Evaluate the effectiveness of annual reports in fulfilling the information needs of the following current and potential users: shareholders, creditors, employees, customers, and financial analysts. f. Annual reports are public and accessible to anyone, including competitors. Discuss how this affects decisions about what information should be provided in annual reports. 1.3 The use of IT at USAA 1.4 Match the description in the right column with the information characteristic in the left column. 1.5 The Howard Leasing Company Student solutions will vary based on their background and education. The following is one possible solution. 1.6 The use of IT at Tesco 1.7 Have you ever imagined having one electronic device that does everything you would ever need? Mobile phone makers in Japan have gone beyond the imagining phase. Cell phones in Japan are becoming more versatile than ever. Newer models of cell phones contain a myriad of applications and can do many of the things that a personal computer (PC) can do. PCs are also able to function as phones. A small but growing number of professionals are trading in their laptops for handheld computers. Cell phone manufacturers in the United States and elsewhere are quickly catching up to their Japanese counterparts. 1.8 Classify each of the following items as belonging in the revenue, expenditure, human resources/payroll, production, or financing cycle. CHAPTER 2 OVERVIEW OF TRANSACTION PROCESSING AND ENTERPRISE RESOURCE PLANNING SYSTEMS SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 2.1 Table 2-1 lists some of the documents used in the revenue, expenditure, and human resources cycle. What kinds of input or output documents or forms would you find in the production (also referred to as the conversion cycle)? 2.2 With respect to the data processing cycle, explain the phrase "garbage in, garbage out." How can you prevent this from happening?
  3. 3. 2.3 What kinds of documents are most likely to be turnaround documents? Do an Internet search to find the answer and to find example turnaround documents. 2.4 The data processing cycle in Figure 2-1 is an example of a basic process found throughout nature. Relate the basic input/process/store/output model to the functions of the human body. 2.5 Some individuals argue that accountants should focus on producing financial statements and leave the design and production of managerial reports to information systems specialists. What are the advantages and disadvantages of following this advice? To what extent should accountants be involved in producing reports that include more than just financial measures of performance? Why? SUGGESTED ANSWERS TO THE PROBLEMS 2.1 The chart of accounts must be tailored to an organization's specific needs. Discuss how the chart of accounts for the following organizations would differ from the one presented for S&S in Table 2-4. 2.2 Design a chart of accounts for SDC. Explain how you structured the chart of accounts to meet the company's needs and operating characteristics. Keep total account code length to a minimum, while still satisfying all of Mace's desires. 2.3 An audit trail enables a person to trace a source document to its ultimate effect on the financial statements or work back from amounts in the financial statements to source documents. Describe in detail the audit trail for the following: 2.4 Your nursery sells various types and sizes of trees, bedding plants, vegetable plants, and shrubs. It also sells fertilizer and potting soil. Design a coding scheme for your nursery. 2.5 Match the following terms with their definitions 2.6 For each of the following scenarios identify which data processing method (batch or online, real-time) would be the most appropriate. 2.7 After viewing the Web sites, and based on your reading of the chapter, write a 2 page paper that describes how an ERP can connect and integrate the revenue, expenditure, human resources/payroll, and financing cycles of a business. 2.8 Which of the following actions update a master file and which would be stored as a record in a transaction file? 2.9 You were hired to assist Ashton Fleming in designing an accounting system for S&S. Ashton has developed a list of the journals, ledgers, reports, and documents that he thinks S&S needs (see Table 2-4). He asks you to complete the following tasks: SUGGESTED ANSWERS TO THE CASE 2.1 Bar Harbor Blueberry Farm CHAPTER 3 SYSTEMS DEVELOPMENTAND DOCUMENTATIONTECHNIQUES SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 3.1 Identify the DFD elements in the following narrative: A customer purchases a few items from a local grocery store. Jill, a salesclerk, enters the transaction in the cash register and
  4. 4. Download Here takes the customer's money. At closing, Jill gives both the cash and the register tape to her manager. 3.2 Do you agree with the following statement: "Any one of the systems documentation procedures can be used to adequately document a given system"? Explain. 3.3 Compare the guidelines for preparing flowcharts, BPDs, and DFDs. What general design principles and limitations are common to all 3 documentation techniques? 3.4 Your classmate asks you to explain flowcharting conventions using real-world examples. Draw each of the major flowchart symbols from memory, placing them into one of four categories: input/output, processing, storage, and flow and miscellaneous. For each symbol, suggest several uses. SUGGESTED ANSWERS TO THE PROBLEMS 3.1 Prepare flowcharting segments for each of the following operations: 3.2 a. Prepare a system flowchart of the process described. 3.2 b. Prepare a business process diagram for the process described. 3.3 a. Prepare a document flowchart to reflect how ANGIC Insurance Company processes its casualty claims. 3.3 b. Prepare a BPD to reflect how ANGIC Insurance Company processes its casualty claims. 3.5 a. Prepare a context diagram and level 0 DFD to document the payroll processing system at No-Wear Products. 3.6 a. Prepare a context diagram and a level 0 DFD to document accounts payable processing at S&S. 3.7 a. Develop a context diagram and a level 0 DFD for the cash receipts system at S&S.
  5. 5. 3.8 Draw a context diagram and at least two levels of DFDs for the preceding operations. 3.9 a. Prepare a context diagram and at least two levels of DFDs for this process. 3.9 b. Prepare a flowchart to document this process. 3.10 a. Prepare and file a tax return with the tax owed to the Internal Revenue Service. 3 .11 Prepare a program flowchart to help Melanie program this process. 3.13 Students are to replicate the flowchart presented in the problem using documentation software such as Visio, Microsoft Word, Microsoft Excel, etc. 3.14 Students are to replicate the data flow diagram presented in the problem using documentation software such as Visio, Microsoft Word, Microsoft Excel, etc. CHAPTER 4 RELATIONAL DATABASES SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 4.1 Contrast the logical and the physical views of data and discuss why separate views are necessary in database applications. Describe which perspective is most useful for each of the following employees: a programmer, a manager, and an internal auditor. How will understanding logical data structures assist you when designing and using database systems? 4.2 The relational data model represents data as being stored in tables. Spreadsheets are another tool that accountants use to employ a tabular representation of data. What are some similarities and differences in the way these tools use tables? How might an accountant's familiarity with the tabular representation of spreadsheets facilitate or hinder learning how to use a relational DBMS? 4.3 Some people believe database technology may eliminate the need for double-entry accounting. This creates three possibilities: (1) the double-entry model will be abandoned; (2) the double-entry model will not be used directly, but an external-level schema based on the double-entry model will be defined for accountants' use; or (3) the double-entry model will be retained in database systems. Which alternative do you think is most likely to occur? Why? 4.4 Relational DBMS query languages provide easy access to information about the organization's activities. Does this mean that online, real-time processing should be used for all transactions? Does an organization need real-time financial reports? Why or why not? 4.5 Why is it so important to have good data? 4.6 What is a data dictionary, what does it contain, and how is it used? 4.7 Compare and contrast the file-oriented approach and the database approach. Explain the main advantages of database systems. 4.8 Create relational tables that solve the update, insert, and delete anomalies in Table 4-17. 4.9 Create relational tables that solve the update, insert, and delete anomalies in Table 4-18. 4.10 From the database created in the comprehensive problem, perform queries based on the tables and query grid shown in Table 4-19. CHAPTER 5 COMPUTER FRAUD
  6. 6. SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 5.1 Do you agree that the most effective way to obtain adequate system security is to rely on the integrity of company employees? Why or why not? Does this seem ironic? What should a company do to ensure the integrity of its employees? 5.2 You are the president of a multinational company in which an executive confessed to kiting $100,000. What is kiting and what can your company do to prevent it? How would you respond to the confession? What issues must you consider before pressing charges? 5.3 Discuss the following statement by Roswell Steffen,a convicted embezzler: "For every foolproof system, there is a method for beating it." Do you believe a completely secure computer system is possible? Explain. If internal controls are less than 100% effective,why should they be employed at all? 5.4 Revlon hired Logisticon to install a real-time invoice and inventory processing system. Seven months later, when the system crashed,Revlon blamed the Logisticon programming bugs they discovered and withheld payment on the contract. 5.5 Because improved computer security measures sometimes create a new set of problems—user antagonism, sluggish response time, and hampered performance—some people believe the most effective computer security is educating users about good moral conduct. Richard Stallman, a computer activist, believes software licensing is antisocial because it prohibits the growth of technology by keeping information away from the neighbors. He believes high school and college students should have unlimited access to computers without security measures so that they can learn constructive and civilized behavior. He states that a protected system is a puzzle and, because it is human nature to solve puzzles, eliminating computer security so that there is no temptation to break in would reduce hacking. Do you agree that software licensing is antisocial? Is ethical teaching the solution to computer security problems? Would the removal of computer security measures reduce the incidence of computer fraud? Why or why not? 5.1 You were asked to investigate extremely high, unexplained merchandise shortages at a department store chain. Classify each of the five situations as a fraudulent act, an indicator of fraud, or an event unrelated to the investigation. Justify your answers. Adapted from the CIA Examination a. The receiving department supervisor owns and operates a boutique carrying many of the same labels as the chain store. The general manager is unaware of the ownership interest. 5.2 A client heard through its hot line that John, the purchases journal clerk, periodically enters fictitious acquisitions. After John creates a fictitious purchase, he notifies Alice, the accounts payable ledger clerk, so she can enter them in her ledger. When the payables are processed,the payment is mailed to the nonexistent supplier's address,a post office box rented by John. John deposits the check in an account he opened in the nonexistent supplier's name. Adapted from the CIA Examination. 5.3 The computer frauds that are publicly revealed represent only the tip of the iceberg. Although many people perceive that the major threat to computer security is external, the more dangerous threats come from insiders. Management must recognize these problems and develop and enforce security programs to deal with the many types of computer fraud. 5.4 Environmental, institutional, or individual pressures and opportune situations, which are present to some degree in all companies, motivate individuals and companies to engage in fraudulent financial reporting. Fraud prevention and detection require that pressures and opportunities be identified and evaluated in terms of the risks they pose to a company.
  7. 7. 5.5 For each of the following independent cases of employee fraud, recommend how to prevent similar problems in the future. 5.6 An auditor found that Rent-A-Wreck management does not always comply with its stated policy that sealed bids be used to sell obsolete cars. Records indicated that severalvehicles with recent major repairs were sold at negotiated prices. Management vigorously assured the auditor that performing limited repairs and negotiating with knowledgeable buyers resulted in better sales prices than the sealed-bid procedures. Further investigation revealed that the vehicles were sold to employees at prices well below market value. Three managers and five other employees pleaded guilty to criminal charges and made restitution. 5.7 A bank auditor met with the senior operations manager to discuss a customer's complaint that an auto loan payment was not credited on time. The customer said the payment was made on May 5, its due date, at a teller's window using a check drawn on an account in the bank. On May 10, when the customer called for a loan pay-off balance so he could sell the car, he learned that the payment had not been credited to the loan. On May 12, the customer went to the bank to inquire about the payment and meet with the manager. The manager said the payment had been made on May 11. The customer was satisfied because no late charge would have been assessed until May 15. The manager asked whether the auditor was comfortable with this situation. The auditor located the customer's paid check and found that it had cleared on May 5. The auditor traced the item back through the computer records and found that the teller had processed the check as being cashed. The auditor traced the payment through the entry records of May 11 and found that the payment had been made with cash instead of a check. What type of embezzlement scheme is this, and how does it work? 5.8 An accountant with the Atlanta Olympic Games was charged with embezzling over $60,000 to purchase a Mercedes-Benz and to invest in a certificate of deposit. Police alleged that he created fictitious invoices from two companies that had contracts with the Olympic Committee: International Protection Consulting and Languages Services. He then wrote checks to pay the fictitious invoices and deposited them into a bank account he had opened under the name of one of the companies. When he was apprehended, he cooperated with police to the extent of telling them of the bogus bank account and the purchase of the Mercedes-Benz and the CD. The accountant was a recent honors graduate from a respected university who, supervisors stated,was a very trusted and loyal employee. 5.9 The ACFE periodically prepares an article called "What Is Your Fraud IQ?" It consists of 10 or more multiple choice questions dealing with various aspects of fraud. The answers,as well as an explanation of each answer,are provided at the end of the article. Visit the Journal of Accountancy site (http://www.journalofaccountancy.com) and search for the articles. Read and answer the questions in three of these articles, and then check your answers. 5.10 Explore the Fraud Prevention, Detection, and Response portion of the AICPA website (www.aicpa.org/INTERESTAREAS/FORENSICANDVALUATION/RESOURCES/FRAUDPRE VENTIONDETECTIONRESPONSE/pages/fraud-prevention-detection-response.aspx),and write a two-page report on the three most interesting things you found on the site. SUGGESTED ANSWERS TO THE CASES 5.1 1. How does Miller fit the profile of the average fraud perpetrator? 2. Explain the three elements of the Opportunity Triangle (commit, conceal, convert) and discuss how Miller accomplished each when embezzling funds from Associated Communications. What specific concealment techniques did Miller use? 3. What pressures motivated Miller to embezzle? How did Miller rationalize his actions?
  8. 8. 4. Miller had a framed T-shirt in his office that said, "He who dies with the most toys wins." What does this tell you about Miller? What lifestyle red flags could have tipped off the company to the possibility of fraud? 5. Why do companies hesitate to prosecute white-collar criminals? What are the consequences of not prosecuting? 6. What could the victimized companies have done to prevent Miller's embezzlement? 5.2 1. Figure 5-3 shows the employees and external parties that deal with Heirloom. Explain how Heirloom could defraud the bank and how each internal and external party except the bank could defraud Heirloom. 2. What risk factor, unusual item, or abnormality would alert you to each fraud? 3. What control weaknesses make each fraud possible? 4. Recommend one or more controls to prevent or detect each means of committing fraud. CHAPTER 6 COMPUTER FRAUD AND ABUSE TECHNIQUES SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 6.1 When U.S. Leasing (USL) computers began acting sluggishly, computer operators were relieved when a software troubleshooter from IBM called. When he offered to correct the problem they were having, he was given a log-on ID and password. The next morning, the computers were worse. A call to IBM confirmed USL's suspicion: Someone had impersonated an IBM repairman to gain unauthorized access to the system and destroy the database. USL was also concerned that the intruder had devised a program that would let him get back into the system even after all the passwords were changed. What techniques might the impostor have employed to breach USL's internal security? 6.2 What motives do people have for hacking? Why has hacking become so popular in recent years? Do you regard it as a crime? Explain your position. 6.3 The UCLA computer lab was filled to capacity when the system slowed and crashed, disrupting the lives of students who could no longer log into the system or access data to prepare for finals. IT initially suspected a cable break or an operating system failure, but diagnostics revealed nothing. After several frustrating hours, a staff member ran a virus detection program and uncovered a virus on the lab's main server. The virus was eventually traced to the computers of unsuspecting UCLA students. Later that evening, the system was brought back online after infected files were replaced with backup copies. 6.1 A few years ago, news began circulating about a computer virus named Michelangelo that was set to "ignite" on March 6, the birthday of the famous Italian artist. The virus attached itself to the computer's operating system boot sector. On the magical date,the virus would release itself, destroying all of the computer's data. When March 6 arrived, the virus did minimal damage. Preventive techniques limited the damage to isolated personal and business computers. Though the excitement surrounding the virus was largely illusory, Michelangelo helped the computer-using public realize its systems' vulnerability to outside attack. 6.2 The controller of a small business received the following e-mail with an authentic-looking e-mail address and logo: 6.3 A purchasing department received the following e-mail.
  9. 9. Dear Accounts Payable Clerk, You can purchase everything you need online—including peace of mind—when you shop using RandomAccount Numbers(RAN). RAN is a free service for Big Credit Card customersthat substitutes a randomcredit card numberin place of yournormal credit card numberwhen you make online purchasesand payments. This randomnumberprovides you with additional security. Before every online purchase, simply get a new numberfromRAN to use at each new vendor. Sign up for an account at www.bigcreditcard.com. Also,take advantage of the following features: 6.4 Match the Internet-related computer fraud and abuse technique in the left column with the scenario in the right column. Terms on the left may be used once, more than once, or not at all. 6. 5 Match the computer fraud and abuse technique in the left column with the scenario in the right column. Terms on the left may be used once, more than once, or not at all. 6.6 Match the computer fraud and abuse technique in the left column with the scenario in the right column. Terms on the left may be used once, more than once, or not at all. 6.7 Match the computer fraud and abuse technique in the left column with the scenario in the right column. Terms on the left may be used once, more than once, or not at all. 6.8 Match the fraud and abuse technique in the left column with the scenario in the right column. Terms on the left may be used once, more than once, or not at all. 6.9 Identify the computer fraud and abuse technique used in each the following actualexamples of computer wrongdoing. 6.10 On a Sunday afternoon at a hospital in the Pacific Northwest,computers became sluggish, and documents would not print. Monday morning, the situation became worse when employees logged on to their computers. Even stranger things happened—operating room doors would not open, pagers would not work, and computers in the intensive care unit shut down. By 10:00 A.M.,all 50 IT employees were summoned. They discovered that the hospital was under attack by a botnet that exploited a Microsoft operating system flaw and installed pop-up ads on hospital computers. They got access to the first computer on Sunday and used the hospital's network to spread the infection to other computers. Each infected computer became a zombie that scanned the network looking for new victims. With the network clogged with zombie traffic, hospital communications began to break down. The IT staff tried to halt the attack by shutting off the hospital's Internet connection, but it was too late. The bots were inside the hospital's computer system and infecting other computers faster than they could be cleaned. Monday afternoon IT figured out which malware the bots were installing and wrote a script, which was pushed out hourly, directing computers to remove the bad code. The script helped to slow the bots down a bit. SUGGESTED ANSWERS TO THE CASE 6.1 1. How did Shadowcrew members concealtheir identities? How can average citizens protect their identities while interacting online? 2. How has the Internet made detecting and identifying identity fraudsters difficult? 3. What are some of the most common electronic means of stealing personal information? 4. What is the most common way that fraudsters use personal data? 5. What measures can consumers take to protect against the online brokering of their personal data? 6. What are the most effective means of detecting identity theft? 7. What pieces of personal information are most valuable to identity fraudsters? CHAPTER 7 CONTROL AND ACCOUNTING INFORMATION SYSTEMS
  10. 10. SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 7.1 Answer the following questions about the audit of Springer's Lumber & Supply a. What deficiencies existed in the internal environment at Springer's? b. Do you agree with the decision to settle with the Springers rather than to prosecute them for fraud and embezzlement? Why or why not? c. Should the company have told Jason and Maria the results of the high-level audit? Why or why not? 7.2 Effective segregation of duties is sometimes not economically feasible in a small business. What internal control elements do you think can help compensate for this threat? One function of the AIS is to provide adequate controls to ensure the safety of organizational assets, including data. However,many people view control procedures as "red tape." They also believe that, instead of producing tangible benefits, business controls create resentment and loss of company morale. Discuss this position. 7.4 In recent years, Supersmurf's external auditors have given clean opinions on its financial statements and favorable evaluations of its internal control systems. Discuss whether it is necessary for this corporation to take any further action to comply with the Sarbanes–Oxley Act. 7.5 When you go to a movie theater, you buy a prenumbered ticket from the cashier. This ticket is handed to another person at the entrance to the movie. What kinds of irregularities is the theater trying to prevent? What controls is it using to prevent these irregularities? What remaining risks or exposures can you identify? 7.6 Some restaurants use customer checks with prenumbered sequence codes. Each food server uses these checks to write up customer orders. Food servers are told not to destroy any customer checks; if a mistake is made, they are to void that check and write a new one. All voided checks are to be turned in to the manager daily. How does this policy help the restaurant control cash receipts? 7.7 Compare and contrast the following three frameworks: COBIT,COSO Integrated Control, and ERM. 7.8 Explain what an event is. Using the Internet as a resource, create a list of some of the many internal and external factors that COSO indicated could influence events and affect a company's ability to implement its strategy and achieve its objectives. 7.9 Explain what is meant by objective setting and describe the four types of objectives used in ERM. 7.10 Discuss several ways that ERM processes can be continuously monitored and modified so that deficiencies are reported to management. SUGGESTED SOLUTIONS TO THE PROBLEMS 7.1 You are an audit supervisor assigned to a new client, Go-Go Corporation, which is listed on the New York Stock Exchange. You visited Go-Go's corporate headquarters to become
  11. 11. acquainted with key personnel and to conduct a preliminary review of the company's accounting policies, controls, and systems. During this visit, the following events occurred: a. You met with Go-Go's audit committee, which consists of the corporate controller, treasurer, financial vice president, and budget director. b. You recognized the treasurer as a former aide to Ernie Eggers, who was convicted of fraud several years ago. c. Management explained its plans to change accounting methods for depreciation from the accelerated to the straight-line method. Management implied that if your firm does not concur with this change, Go-Go will employ other auditors. d. You learned that the financial vice president manages a staff of five internal auditors. e. You noted that all management authority seems to reside with three brothers, who serve as chief executive officer, president, and financial vice president. f. You were told that the performance of division and department managers is evaluated on a subjective basis, because Go-Go's management believes that formal performance evaluation procedures are counterproductive. g. You learned that the company has reported increases in earnings per share for each of the past 25 quarters; however, earnings during the current quarter have leveled off and may decline. h. You reviewed the company's policy and procedures manual, which listed policies for dealing with customers, vendors, and employees. i. Your preliminary assessment is that the accounting systems are well designed and that they employ effective internal control procedures. j. Some employees complained that some managers occasionally contradict the instructions of other managers regarding proper data security procedures. k. After a careful review of the budget for data security enhancement projects, you feel the budget appears to be adequate. l. The enhanced network firewall project appeared to be on a very aggressive implementation schedule. The IT manager mentioned that even if he put all of his personnel on the project for the next five weeks, he still would not complete the project in time. The manager has mentioned this to company management, which seems unwilling to modify the schedule. m. Several new employees have had trouble completing some of their duties, and they do not appear to know who to ask for help. n. Go-Go's strategy is to achieve consistent growth for its shareholders. However, its policy is not to invest in any project unless its payback period is no more than 48 months and yields an internal rate of return that exceeds its cost of capital by 3%. o. You observe that company purchasing agents wear clothing and exhibit other paraphernalia from major vendors. The purchasing department manager proudly displays a picture of himself holding a big fish on the deck of a luxury fishing boat that
  12. 12. has the logo of a major Go-Go vendor painted on its wheelhouse. 7.2 Explain how the principle of separation of duties is violated in each of the following situations. Also, suggest one or more procedures to reduce the risk and exposure highlighted in each example. 7.3 The following description represents the policies and procedures for agent expense reimbursements at Excel Insurance Company. 7.5 During a recent review, ABC Corporation discovered that it has a serious internal control problem. It is estimated that the impact associated with this problem is $1 million and that the likelihood is currently 5%. Two internal control procedures have been proposed to deal with this problem. Procedure A would cost $25,000 and reduce likelihood to 2%; procedure B would cost $30,000 and reduce likelihood to 1%. If both procedures were implemented, likelihood would be reduced to 0.1%. 7.6 The management at Covington, Inc.,recognizes that a well-designed internal control system provides many benefits. Among the benefits are reliable financial records that facilitate decision making and a greater probability of preventing or detecting errors and fraud. Covington's internal auditing department periodically reviews the company's accounting records to determine the effectiveness of internal controls. In its latest review, the internal audit staff found the following eight conditions: 7.7 Consider the following two situations: For the situations presented,describe the recommendations the internal auditors should make to prevent the following problems. Adapted from the CMA Examination Situation 1: Many employees of a firm that manufactures small tools pocket some of the tools for their personal use. Since the quantities taken by any one employee are immaterial, the individual employees do not consider the act as fraudulent or detrimental to the company. The company is now large enough to hire an internal auditor. One of the first things she did was to compare the gross profit rates for industrial tools to the gross profit for personal tools. Noting a significant difference, she investigated and uncovered the employee theft. 7.8 Tralor Corporation manufactures and sells severaldifferent lines of small electric components. Its internal audit department completed an audit of its expenditure processes. Part of the audit involved a review of the internal accounting controls for payables, including the controls over the authorization of transactions, accounting for transactions, and the protection of assets. The auditors noted the following items: Lancaster Company makes electrical parts for contractors and home improvement retail stores. After their annual audit, Lancaster's auditors commented on the following items regarding internal controls over equipment: 7.10 The Langston Recreational Company (LRC) manufactures ice skates for racing, figure skating, and hockey. The company is located in Kearns,Utah, so it can be close to the Olympic Ice Shield, where many Olympic speed skaters train. 7.11 Spring Water Spa Company is a 15-store chain in the Midwest that sells hot tubs, supplies, and accessories. Each store has a full-time, salaried manager and an assistant manager. The sales personnel are paid an hourly wage and a commission based on sales volume. 7.12 PriceRight Electronics (PEI) is a small wholesale discount supplier of electronic instruments and parts. PEI's competitive advantage is its deep-discount, three-day delivery guarantee,which allows retailers to order materials often to minimize in-store inventories. PEI processes its records with stand- alone, incompatible computer systems except for integrated enterprise resource planning (ERP) inventory and accounts receivable modules. PEI decided to finish integrating its operations with more ERP modules, but because of cash flow considerations, this needs to be accomplished on a step-by-step basis.
  13. 13. SUGGESTED SOLUTIONS TO THE CASE 7.1 Nino Moscardi, president of Greater Providence Deposit & Trust (GPD&T),received an anonymous note in his mail stating that a bank employee was making bogus loans. Moscardi asked the bank's internal auditors to investigate the transactions detailed in the note. The investigation led to James Guisti, manager of a North Providence branch office and a trusted 14-year employee who had once worked as one of the bank's internal auditors. Guisti was charged with embezzling $1.83 million from the bank using 67 phony loans taken out over a three-year period. CHAPTER 8 CONTROLS FOR INFORMATION SECURITY SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 8.1 Explain why an organization would want to use all of the following information security controls: firewalls, intrusion prevention systems, intrusion detection systems, and a CIRT. 8.2 What are the advantages and disadvantages of having the person responsible for information security report directly to the chief information officer (CIO),who has overall responsibility for all aspects of the organization's information systems? 8.3 Reliability is often included in service level agreements (SLAs) when outsourcing. The toughest thing is to decide how much reliability is enough. Consider an application like e-mail. If an organization outsources its e-mail to a cloud provider, what is the difference between 95%, 99%, 99.99%, and 99.9999% reliability? 8.4 What is the difference between authentication and authorization? 8.5 What are the limitations, if any, of relying on the results of penetration tests to assess the overall level of security? 8.6 Security awareness training is necessary to teach employees "safe computing" practices. The key to effectiveness, however, is that it changes employee behavior. How can organizations maximize the effectiveness of their security awareness training programs? 8.7 What is the relationship between COSO,COBIT 5, and the AICPA's Trust Services frameworks? SUGGESTED SOLUTIONS TO THE PROBLEMS 8.1 Match the following terms with their definitions: 8.3 The following table lists the actions that various employees are permitted to perform: 8.4 Which preventive, detective, and/or corrective controls would best mitigate the following threats? 8.5 What are the advantages and disadvantages of the three types of authentication credentials (something you know, something you have, and something you are)?
  14. 14. 8.6 a. Apply the following data to evaluate the time-based model of security for the XYZ Company. Does the XYZ Company satisfy the requirements of the time-based model of security? Why? 8.7 Explain how the following items individually and collectively affect the overall level of security provided by using a password as an authentication credential. CHAPTER 9 CONFIDENTIALITY AND PRIVACY CONTROLS SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 9.1 From the viewpoint of the customer, what are the advantages and disadvantages to the opt-in versus the opt-out approaches to collecting personal information? From the viewpoint of the organization desiring to collect such information? 9.2 What risks, if any, does offshore outsourcing of various information systems functions pose to satisfying the principles of confidentiality and privacy? 9.3 Upon your request (with proper verification of your identity) should organizations be required to delete personal information about you that they possess? 9.4 What privacy concerns might arise from the use of biometric authentication techniques? What about the embedding of RFID tags in products such as clothing? What other technologies might create privacy concerns? 9.5 What do you think an organization's duty or responsibility should be to protect the privacy of its customers' personal information? Why? 9.6 Assume you have interviewed for a job online and now receive an offer of employment. The job requires you to move across the country. The company sends you a digital signature along with the contract. How does this provide you with enough assurance to trust the offer so that you are willing to make the move? SUGGESTED SOLUTIONS TO THE PROBLEMS 9.1 Match the terms with their definitions: 9.2 Cost-effective controls to provide confidentiality require valuing the information that is to be protected. This involves classifying information into discrete categories. Propose a minimal classification scheme that could be used by any business, and provide examples of the type of information that would fall into each of those categories. 9.3 Download a hash calculator that can create hashes for both files and text input. Use it to create SHA-256 (or any other hash algorithm your instructor assigns) hashes for the following: 9.4 Accountants often need to print financial statements with the words "CONFIDENTIAL" or "DRAFT" appearing in light type in the background. 9.5 Create a spreadsheet to compare current monthly mortgage payments versus the new monthly payments if the loan were refinanced, as shown (you will need to enter formulas into the two cells with solid borders like a box: D9 and D14) a. Restrict access to the spreadsheet by encrypting it.
  15. 15. 9.6 Visit Symantec.com or any other security software vendor assigned by your instructor and download a trial version of encryption software. 9.7 The principle of confidentiality focuses on protecting an organization's intellectual property. The flip side of the issue is ensuring that employees respect the intellectual property of other organizations. Research the topic of software piracy and write a report that explains: a. What software piracy is. b. How organizations attempt to prevent their employees from engaging in software piracy. c. How software piracy violations are discovered. d. The consequences to both individual employees and to organizations who commit software piracy. 9.8 Practice encryption using both any encryption capabilities provided by your computer's operating system and by using third-party encryption software. Required: a. Use your computer operating system's built-in encryption capability to encrypt a file. 9.9 Explore and test various browser privacy settings. a. Open your favorite browser and print a screenshot of your current settings. 9.10 Certificate authorities are an important part of a public key infrastructure (PKI). Research at least two certificate authorities and write a report that explains the different types of digital certificates that they offer. 9.11 Explore the power of the :bcc feature to protect privacy. SUGGESTED SOLUTIONS TO THE CASES Case 9-1 Protecting Privacy of Tax Returns The department of taxation in your state is developing a new computer system for processing individual and corporate income-tax returns. The new system features direct data input and inquiry capabilities. Identification of taxpayers is provided by using the Social Security number for individuals and federal tax identification number for corporations. The new system should be fully implemented in time for the next tax season. Case 9-2 Generally Accepted Privacy Principles Obtain a copy of Generally Accepted Privacy Principles from the AICPA's web site (www.aicpa.org). (You will find it by following this path: Under Interest Areas choose Information Management and Technology Assurance then in the upper left portion of that page in the box titled Resources select Privacy and scrolldown the list until you find GAPP). Use the GAPP document to answer the following questions: CHAPTER 10 PROCESSING INTEGRITY AND AVAILABILITY CONTROLS
  16. 16. SPECIAL INTRODUCTION TO EXCEL SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 10.1 Two ways to create processing integrity controls in Excel spreadsheets are to use the built-in Data Validation tool or to write custom code with IF statements. What are the relative advantages and disadvantages of these two approaches? 10.2 What is the difference between using check digit verification and a validity check to test the accuracy of an account number entered on a transaction record? 10.3 For each of the three basic options for replacing IT infrastructure (cold sites, hot sites, and real- time mirroring) give an example of an organization that could use that approach as part of its DRP. Be prepared to defend your answer. 10.4 Use the numbers 10–19 to show why transposition errors are always divisible by 9. 10.5 What are some business processes for which an organization might use batch processing? 10.6 Why do you think that surveys continue to find that a sizable percentage of organizations either do not have formal disaster recovery and business continuity plans or have not tested and revised those plans for more than a year? SUGGESTED SOLUTIONS TO THE PROBLEMS 10.1 Match the following terms with their definitions: 10.2 Excel Problem Enter the following data into a spreadsheet and then perform the following tasks: 10.3 Excel Problem The Moose Wings Cooperative Flight Club owns a number of airplanes and gliders. It serves fewer than 2,000 members, who are numbered sequentially from the founder, Tom Eagle (0001), to the newest member, Jacques Noveau (1368). Members rent the flying machines by the hour, and all must be returned on the same day. The following six records were among those entered for the flights taken on September 1, 2010: 10.4 The first column in Table 10-3 lists transaction amounts that have been summed to obtain a batch total. Assume that all data in the first column are correct. Cases a through d each contain an input error in one record, along with a batch total computed from that set of records. 10.5 Excel Problem 10.7 Which control(s) would best mitigate the following threats? 10.8 MonsterMed Inc. (MMI) is an online pharmaceutical firm. MMI has a small systems staff that designs and writes MMI's customized software. The data center is installed in the basement of its two-story headquarters building. The data center is equipped with halon-gas fire suppression equipment and an uninterruptible power supply system. 10.9 Excel Problem Create data validation rules in a spreadsheet to perform each of the following controls: SUGGESTED ANSWERS TO THE CASES
  17. 17. Case 10-1 Ensuring Systems Availability Case 10-2 Ensuring Process Integrity in Spreadsheets CHAPTER 11 AUDITING COMPUTER-BASED INFORMATION SYSTEMS SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 11.1 Auditing an AIS effectively requires that an auditor have some knowledge of computers and their accounting applications. However,it may not be feasible for every auditor to be a computer expert. Discuss the extent to which auditors should possess computer expertise to be effective auditors. 11.2 Should internal auditors be members of systems development teams that design and implement an AIS? Why or why not? 11.3 At present, no Berwick employees have auditing experience. To staff its new internal audit function, Berwick could (a) train some of its computer specialists in auditing, (b) hire experienced auditors and train them to understand Berwick's information system, (c) use a combination of the first two approaches,or (d) try a different approach. Which approach would you support, and why? 11.4 The assistant finance director for the city of Tustin, California, was fired after city officials discovered that she had used her access to city computers to cancelher daughter's $300 water bill. An investigation revealed that she had embezzled a large sum of money from Tustin in this manner over a long period. She was able to concealthe embezzlement for so long because the amount embezzled always fell within a 2% error factor used by the city's internal auditors. What weaknesses existed in the audit approach? How could the audit plan be improved? What internal control weaknesses were present in the system? Should Tustin's internal auditors have discovered this fraud earlier? 11.5 Lou Goble, an internal auditor for a large manufacturing enterprise, received an anonymous note from an assembly-line operator who has worked at the company's West Coast factory for the past 15 years. The note indicated that there are some fictitious employees on the payroll as well as some employees who have left the company. He offers no proof or names. What computer-assisted audit technique could Lou use to help him substantiate or refute the employee's claim? 11.6. Explain the four steps of the risk-based audit approach, and discuss how they apply to the overall security of a company. 11.7. Compare and contrast the frameworks for auditing program development/acquisition and for auditing program modification. SUGGESTED SOLUTIONS TO THE PROBLEMS 11.1 You are the director of internal auditing at a university. Recently, you met with Issa Arnita, the manager of administrative data processing, and expressed the desire to establish a more effective interface between the two departments. Issa wants your help with a new computerized accounts payable system currently in development. He recommends that your department assume line responsibility for auditing suppliers' invoices prior to payment. He also wants internal auditing to make suggestions during system development, assist in its installation, and approve the completed system after making a final review.
  18. 18. Would you accept or reject each of the following? Why? 11.2 As an internal auditor for the Quick Manufacturing Company, you are participating in the audit of the company's AIS. You have been reviewing the internal controls of the computer system that processes most of its accounting applications. You have studied the company's extensive systems documentation. You have interviewed the information system manager, operations supervisor, and other employees to complete your standardized computer internal control questionnaire. You report to your supervisor that the company has designed a successfulset of comprehensive internal controls into its computer systems. He thanks you for your efforts and asks for a summary report of your findings for inclusion in a final overall report on accounting internal controls. 11.3 As an internal auditor, you have been assigned to evaluate the controls and operation of a computer payroll system. To test the computer systems and programs, you submit independently created test transactions with regular data in a normal production run. 11.4 You are involved in the audit of accounts receivable, which represent a significant portion of the assets of a large retail corporation. Your audit plan requires the use of the computer, but you encounter the following reactions: 11.5 You are a manager for the CPA firm of Dewey,Cheatem, and Howe (DC&H). While reviewing your staff's audit work papers for the state welfare agency,you find that the test data approach was used to test the agency's accounting software. A duplicate program copy, the welfare accounting data file obtained from the computer operations manager, and the test transaction data file that the welfare agency's programmers used when the program was written were processed on DC&H's home office computer. The edit summary report listing no errors was included in the working papers, with a notation by the senior auditor that the test indicates good application controls. You note that the quality of the audit conclusions obtained from this test is flawed in several respects,and you decide to ask your subordinates to repeat the test. 11.6 You are performing an information systemaudit to evaluate internal controls in Aardvark Wholesalers' (AW) computer system. From an AW manual, you have obtained the following job descriptions for key personnel: 11.7 Robinson's Plastic Pipe Corporation uses a data processing system for inventory. The input to this system is shown in Table 11-7. You are using an input controls matrix to help audit the source data controls. 11.8 As an internal auditor for the state auditor's office, you are assigned to review the implementation of a new computer systemin the state welfare agency.The agency is installing an online computer systemto 11.9 Melinda Robinson, the director of internal auditing at Sachem Manufacturing Company, believes the company should purchase software to assist in the financial and procedural audits her department conducts. Robinson is considering the following software packages: 11.10 The fixed-asset master file at Thermo-Bond includes the following data items: 11.11 You are auditing the financial statements of a cosmetics distributor that sells thousands of individual items. The distributor keeps its inventory in its distribution center and in two public warehouses. At the end of each business day, it updates its inventory file, whose records contain the following data: 11.12 Which of the following should have the primary responsibility to detect and correct data processing errors? Explain why that function should have primary responsibility and why the others should not. SUGGESTED SOLUTIONS TO THE CASES 11.1 You are performing a financial audit of the general ledger accounts of Preston Manufacturing. As transactions are processed,summary journal entries are added to the general ledger file at the end of the day. At the end of each day, the general journal file is processed against the general ledger control file to compute a new current balance for each account and to print a trial balance.
  19. 19. Download Here CHAPTER 12 THE REVENUE CYCLE: SALES TO CASH COLLECTIONS SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 12.1 Customer relationship management systems hold great promise, but their usefulness is determined by the amount of personal data customers are willing to divulge. How can companies encourage customers to share useful personal information? 12.2 Some products, like music and software, can be digitized. How does this affect each of the four main activities in the revenue cycle? 12.3 Many companies use accounts receivable aging schedules to project future cash inflows and bad-debt expense. Review the information typically presented in such a report (see Figure 12-8). Which specific metrics can be calculated from those data that might be especially useful in providing early warning about looming cash flow or bad-debt problems? 12.4 Table 12-1 suggests that restricting physical access to inventory is one way to reduce the threat of theft. How can information technology help accomplish that objective? 12.5 Invoiceless pricing has been adopted by some large businesses for B2B transactions. What are the barriers, if any, to its use in B2C commerce? 12.6 If AOE decides to begin selling directly to individual customers, what changes will it need to make in its business processes? SUGGESTED ANSWERS TO THE PROBLEMS 12.1 Match the term in the left column with its definition in the right column. 12.2 What internal control procedure(s) would provide protection against the following threats? 12.3 For good internal control, which of the following duties can be performed by the same individual? Explain your answer. 12.4 EXCEL PROJECT. (Hint: For help on steps b and c, see the article "Dial a Forecast," by James A. Weisel, in the December 2006 issue of the Journal of Accountancy. The Journal of Accountancy is available in print or online at the AICPA's Web site: www.aicpa.org 12.6 Create a questionnaire checklist that can be used to evaluate controls for each of the four basic activities in the revenue cycle (sales order entry, shipping, billing, and cash collections). 12.7 O'Brien Corporation is a midsize, privately owned, industrial instrument manufacturer supplying precision equipment to manufacturers in the Midwest. The corporation is 10 years old
  20. 20. and uses an integrated ERP system. The administrative offices are located in a downtown building and the production, shipping, and receiving departments are housed in a renovated warehouse a few blocks away. 12.8 Parktown Medical Center, Inc. is a small health care provider owned by a publicly held corporation. It employs seven salaried physicians, ten nurses, three support staff, and three clerical workers. The clerical workers perform such tasks as reception, correspondence, cash receipts, billing, and appointment scheduling. All are adequately bonded. 12.9 Figure 12-20 depicts the activities performed in the revenue cycle by the Newton Hardware Company. .10 The Family Support Center is a small charitable organization. It has only four full- 12.11 Match the threats in the first column to the appropriate control procedures in the second column (more than one control may address the same threat). 12.12 EXCEL PROBLEM Use EXCEL's regression tools to analyze and forecast future sales. 12.13 Excel Project .14 The following table presents the results of using a CAAT tool to interrogate the XYZ Company's ERP system for revenue cycle activities. It shows the number of times each employee performed a specific task. SUGGESTED ANSWERS TO THE CASES Case 12.1: RESEARCH PROJECT:Research Project:How CPA Firms Are Leveraging New Developments in IT CHAPTER 13 THE EXPENDITURE CYCLE: PURCHASING AND CASH DISBURSEMENTS SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 13.1 In this chapter and in Chapter 12 the controller of AOE played a major role in evaluating and recommending ways to use IT to improve efficiency and effectiveness. Should the company's chief information officer make these decisions instead? Should the controller be involved in making these types of decisions? Why or why not? 13.2 Companies such as Wal-Mart have moved beyond JIT to VMI systems. Discuss the potential advantages and disadvantages of this arrangement. What special controls, if any, should be developed to monitor VMI systems? 13.3 Procurement cards are designed to improve the efficiency of small noninventory purchases. What controls should be placed on their use? Why? 13.4 In what ways can you apply the control procedures discussed in this chapter to paying personal debts (e.g., credit card bills)?
  21. 21. 13.5 Should every company switch from the traditional 3-way matching process (purchase orders, receiving reports, and supplier invoices) to the 2-way match (purchase orders and receiving reports) used in Evaluate Receipt Settlement (ERS)? Why (not)? 13.6 Should companies allow purchasing agents to start their own businesses that produce goods the company frequently purchases? Why? Would you change your answer if the purchasing agent's company was rated by an independent service, like Consumer Reports, as providing the best value for price? Why? SUGGESTED ANSWERS TO THE PROBLEMS 13.1 a. A purchasing agent orders materials from a supplier that he partially owns. 13.2 Match the terms in the left column with their appropriate definition in the right column. 13.3 EXCEL PROJECT. Using Benford's Law to Detect Potential Disbursements Fraud. 13.4 Match threats in the first column to appropriate control procedures in the second column. More than one control may be applicable. 13.5 Use Table 13-2 to create a questionnaire checklist that can be used to evaluate controls for each of the basic activities in the expenditure cycle (ordering goods, 13.6 EXCEL PROJECT 13.7 The following table presents the results of using a CAAT tool to interrogate the XYZ Company's ERP system for expenditure cycle activities. It shows the number of times each employee performed a specific task. 13.9 For good internal control, which of the following duties can be performed by the same individual? 13.10 Last year the Diamond Manufacturing Company purchased over $10 million worth of office equipment under its "special ordering" system, with individual orders 13.11 The ABC Company performs its expenditure cycle activities using its integrated ERP system as follows: 13.12 Figure 13-11 depicts the basic activities performed in Lexsteel's expenditure cycle. The following additional information supplements that figure: CHAPTER 14 THE PRODUCTION CYCLE SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 14.1. When activity-based cost reports indicate that excess capacity exists, management should either find alternative revenue-enhancing uses for that capacity or eliminate it through downsizing. What factors influence management's decision? What are the likely behavioral side effects of each choice? What implications do those side effects have for
  22. 22. the long-run usefulness of activity-based cost systems? 14.2. Why should accountants participate in product design? What insights about costs can accountants contribute that differ from the perspectives of purchasing managers and engineers? 14.3. Some companies have eliminated the collection and reporting of detailed analyses on direct labor costs broken down by various activities. Instead, first-line supervisors are responsible for controlling the total costs of direct labor. The justification for this argument is that labor costs represent only a small fraction of the total costs of producing a product and are not worth the time and effort to trace to individual activities. Do you agree or disagree with this argument? Why? 14.4. Typically, McDonald's produces menu items in advance of customer orders based on anticipated demand. In contrast, Burger King produces menu items only in response to customer orders. Which system (MRP-II or lean manufacturing) does each company use? What are the relative advantages and disadvantages of each system? 14.5 Some companies have switched from a "management by exception" philosophy to a "continuous improvement" viewpoint. The change is subtle, but significant. Continuous improvement focuses on comparing actual performance to the ideal (i.e., perfection). Consequently, all variances are negative (how can you do better than perfect?). The largest variances indicate the areas with the greatest amount of "waste," and, correspondingly, the greatest opportunity for improving the bottom line. What are the advantages and disadvantages of this practice? SUGGESTED ANSWERS TO THE PROBLEMS 14.1. Match the terms in the left column with their definitions from the right column: 14.2 What internal control procedure(s) would best prevent or detect the following problems? 14.3 Use Table 14-1 to create a questionnaire checklist that can be used to evaluate controls for each of the basic activities in the production cycle (product design, planning and scheduling, production operations, and cost accounting). 14.4 You have recently been hired as the controller for a small manufacturing firm that makes high-definition televisions. One of your first tasks is to develop a report measuring throughput. 14.5 The Joseph Brant Manufacturing Company makes athletic footwear. Processing of production orders is as follows: At the end of each week, the production planning department prepares a master production schedule (MPS) that lists which shoe 14.6 The XYZ company's current production processes have a scrap rate of 15% and a return rate of 3%. Scrap costs (wasted materials) are $12 per unit; warranty/repair costs average $60 per unit returned. The company is considering the following alternatives to improve its production processes: 14.7 EXCEL PROBLEM a. Download the spreadsheet for problem 14.7 from the website for this textbook. 14.8 EXCEL PROBLEM Task: Use Excel and the Solver add-in to explore the effect of various resource constraints on the optimal product mix. a. Read the article "Boost Profits With Excel," by James A. Weisel in the December 2003 issue of the Journal of Accountancy (available online at the AICPA's Web site, www.aicpa.org b. Download the sample spreadsheet discussed in the article and print out the screenshots showing that you used the Solver tool as discussed in the article.
  23. 23. 14.9 EXCEL PROBLEM Download the spreadsheet for problem 14.9 from the website for this textbook. Write formulas to calculate the total depreciation expense and to display the correct values in the following three columns: Age, Depreciation Rate,and Depreciation Expense. (Hint: You will need to use the VLOOKUP and MATCH functions to do this. You may also want to read the article "Double- Teaming In Excel," by Judith K. Welch, Lois S. Mahoney, and Daniel R. Brickner, in the November 2005 issue of the Journal of Accountancy,from which this problem was adapted). SUGGESTED ANSWERS TO THE CASES CASE 14-1 CHAPTER 15 THE HUMAN RESOURCES MANAGEMENT/PAYROLL CYCLE SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 15.1 This chapter noted many of the benefits that can arise by integrating the HRM and payroll databases. Nevertheless, many companies maintain separate payroll and HRM information systems. Why do you think this is so? (Hint: Think about the differences in employee background and the functions performed by the HRM and payroll departments.) 15.2 Some accountants have advocated that a company's human assets be measured and included directly in the financial statements. For example, the costs of hiring and training an employee would be recorded as an asset that is amortized over the employee's expected term of service. Do you agree or disagree? Why? 15.3 You are responsible for implementing a new employee performance measurement system that will provide factory supervisors with detailed information about each of their employees on a weekly basis. In conversation with some of these supervisors, you are surprised to learn they do not believe these reports will be useful. They explain that they can already obtain all the information they need to manage their employees simply by observing the shop floor. Comment on that opinion. 15.4 One of the threats associated with having employees telecommute is that they may use company- provided resources (e.g.,laptop, printer, etc.) for a side business. What are some other threats? 15.5 How would you respond to the treasurer of a small charity who tells you that the organization does not use a separate checking account for payroll because the benefits are not worth the extra monthly service fee? 15.6 This chapter discussed how the HR department should have responsibility for updating the HRM/payroll database for hiring, firing, and promotions. What other kinds of changes may need to be made? 15.1 Match the terms in the left column with the appropriate definition from the right column. 15.2 What internal control procedure(s) would be most effective in preventing the following errors or fraudulent acts? 15.3 You have been hired to evaluate the payroll system for the Skip-Rope Manufacturing Company. The company processes its payroll in-house. Use Table 15-1 as a reference to prepare a list of questions to evaluate Skip-Rope's internal control structure as it pertains to payroll processing for its factory employees. Each question should be phrased so that it can be answered
  24. 24. with either a yes or a no; all no answers should indicate potential internal control weaknesses. Include a third column listing the potential problem that could arise if that particular control were not in place. 15.4 Although most medium and large companies have implemented sophisticated payroll and HRM systems like the one described in this chapter, many smaller companies still maintain separate payroll and HRM systems that employ many manual procedures. Typical of such small companies is the Kowal Manufacturing Company, which employs about 50 production workers and has the following payroll procedures: 15.5 Arlington Industries manufactures and sells engine parts for large industrial equipment. The company employs over 1,000 workers for three shifts, and most employees work overtime when necessary. Figure 15-10 depicts the procedures followed to process payroll. Additional information about payroll procedures follows: 15.6 Excel Problem Objective: Learn how to find and correct errors in complex spreadsheets used for payroll. 15.7 Excel Problem Objective: Learn how to use the VLOOKUP function for payroll calculations. a. Read the article "Make Excel a Little Smarter" by Lois S. Mahoney and Charles Kelliher in the Journal of Accountancy (July 2003). You can find a copy at www.aicpa.org. 15.8 The local community feels that secondary school education is a necessity in our society and that lack of education leads to a number of social problems. As a result, the local school board has decided to take action to reverse the rising dropout rate. The board has voted to provide funds to encourage students to remain in school and earn their high school diplomas. The idea is to treat secondary education like a job and pay students. The board, however, could not agree on the details for implementing this new plan. Consequently, you have been hired to devise a system to compensate students for staying in school and earning a diploma. 15.9 What is the purpose of each of the following control procedures (i.e., what threats is it designed to mitigate)? 15.10 Excel Problem Objective: Learn how to use text and array formulas to locate potential payroll problems. SUGGESTED ANSWERS TO THE CASES CASE 15-1 ResearchReport: HRM/Payroll Opportunities for CPAs CHAPTER 16 GENERAL LEDGER AND REPORTING SYSTEM SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 16.1 Although XBRL facilitates the electronic exchange of financial information, some external users do not think it goes far enough. They would like access to the entire general ledger, not just to XBRL-tagged financial reports that summarize general ledger accounts. Should companies provide external users with such access? Why or why not? 16.2 How can responsibility accounting and flexible budgets improve morale? 16.3 Why is the audit trail an important control?
  25. 25. 16.4 The balanced scorecard measures organizational performance along four dimensions. Is it possible that measures on the customer, internal operations, and innovation and learning dimensions could be improving without any positive change in the financial dimension? If so, what are the implications of such a pattern? 16.5 Do you think that mandatory standards should be developed for the design of graphs of financial data that are included in annual reports and other periodic communications to investors? Why or why not? SUGGESTED ANSWERS TO THE PROBLEMS 16.1 Match the term in the left column with its appropriate definition from the right column: 16.2 Which control procedure would be most effective in addressing the following problems? 16.3 Explain the components of an audit trail for verifying changes to accounts payable. Your answer should specify how those components can be used to verify the accuracy, completeness, and validity of all purchases, purchase returns, purchase discounts, debit memos, and cash disbursements. 16.4 As manager of a local pizza parlor, you want to develop a balanced scorecard so you can more effectively monitor the restaurant's performance. a. Propose at least two goals for each dimension, and explain why those goals are important to the overall success of the pizza parlor. One goal should be purely performance-oriented and the other should be risk-related. b. Suggest specific measures for each goal developed in part a. 16.5 Use Table 16-1 to create a questionnaire checklist that can be used to evaluate controls in the general ledger and reporting cycle. a. For each control issue, write a Yes/No question such that a "No" answer represents a control weakness. For example, one question might be "Is access to the general ledger restricted?" 16.6 Excel Problem Objective: Enhancing Tabular Displays in Excel 16.7 Obtain the annual report of a company assigned by your professor. Read the management discussion and analysis section, and develop a balanced scorecard that reflects that company's vision, mission, and strategy. Create both performance- 16.8 Excel Problem Objective: Practice graph design principles. 16.9 Excel Problem Objective: Create pivot tables for what-if analysis Read the article "Make Excel an Instant Know-It-All" by Roberta Ann Jones in the March 2004 issue of the Journal of Accountancy. (Available at www.aicpa.org) 16.10 Excel Problem Objective: How to do what-if analysis with graphs. a. Read the article "Tweaking the Numbers," by Theo Callahan in the June 2001 issue of the Journal of Accountancy (either the print edition, likely available at your school's library, or access the Journal of Accountancy archives at www.aicpa.org). Follow the instructions in the article to create a spreadsheet with graphs that do what- if analysis.
  26. 26. SUGGESTED ANSWERS TO THE CASES Case 16-1 Exploring XBRL Tools Each year companies release new software tools designed to simplify the process of interacting with XBRL. Obtain a free trial (demo) version of two of the following tools and write a brief report comparing them: Case 16-3 Visualization tools for Big Data CHAPTER 17 DATABASE DESIGN USING THE REA DATA MODEL SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 17.1 Why is it not necessary to model activities such as entering information about customers or suppliers, mailing invoices to customers, and recording invoices received from suppliers as events in an REA diagram? 17.2 The basic REA template includes links between two events and links between events and resources and between events and agents. Why do you think the basic REA template does not include direct links between (a) two resources,(b) two agents,or (c) between resources and agents? 17.3 How can REA diagrams help an auditor understand a client's business processes? 17.4 Which parts of Figure 17-6 would accurately depict almost every organization's revenue cycle? Which parts would change? 17.5 What is the relationship between the things that would be represented as resources in an REA diagram and the different categories of assets found on an organization's balance sheet? (Hint: Are there any assets that would not be modeled as resources? Are there any resources in an REA diagram that are not listed as assets on a balance sheet?) 17.6 How would accounts payable be reflected in an REA diagram? Why? 17.7 What are the five stages of the database design process? In which stages should accountants participate? Why? 17.8 What is the difference between an Entity-Relationship (E-R) diagram and an REA diagram? SUGGESTED ANSWERS TO THE PROBLEMS 17.1 Joe's is a small ice-cream shop located near the local university's baseball field. Joe's serves walk-in customers only. The shop carries 26 flavors of ice cream. 17.2 Joe, the owner of the ice-cream shop, purchases ice cream from two vendors. 17.3 Sue's Gallery sells original paintings by local artists 17.4 Sue's Gallery only purchases finished paintings 17.5 Develop a data model of Fred's Train Shop's expenditure cycle activities related to the acquisition of office equipment and other fixed assets. 17.6 Provide an example (in terms of companies with which you are familiar) for each of the business situations described by the following relationship cardinalities: 17.7 Model the cardinalities of the following business policies
  27. 27. 17.8 The Computer Warehouse sells computer hardware,software,and supplies (such as paper). Individual customers just walk into the store, select merchandise, and must 17.9 The Computer Warehouse purchases its inventory from more than a dozen different vendors. Orders are placed via telephone, fax 17.10 Stan's Southern Barbeque Supply Store orders mass-produced barbecue products from various suppliers. Stan's maintains information about SUGGESTED ANSWERS TO THE CASES 17.1 Sparky's Amusement Park is an entertainment park run by recent college CHAPTER 18 IMPLEMENTING AN REA MODEL IN A RELATIONAL DATABASE SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 18.1 How would the process of generating a cash disbursements journal from the REA data model presented in Figure 18-4 and Table 18-1 differ from the process for creating a sales journal? 18.2 Why take the time to develop separate REA diagrams for each business cycle if the ultimate objective is to combine them into one integrated enterprise-wide data model? Why not just focus on the integrated model from the start? 18.3 Building separate tables for every relationship (1:1, 1:N, and M:N) does not violate any of the rules for building a well-structured database. Why then do you think that REA data modelers recommend building separate tables only for M:N relationships and using foreign keys to implement 1:1 and 1:N relationships? 18.4 Assume that there exists a 1:1 relationship between the Receive Inventory and Disburse Cash events. How does the manner in which the relationship between the two events is implemented (i.e., in which table a foreign key is placed) affect the process used to record payments made to suppliers? 18.5 Refer to Figure 18-4 and Table 18-1. How would you determine the amount of cash that Fred's Train Shop has at any point in time? 18.6 Why does Figure 18-4 show only one cash disbursement entity if Fred's Train Shop uses a general operating checking account for purchases of inventory, supplies, and operating expenses such as rent but also uses a separate checking account for payroll? 18.7 Examine Figure 18-4 and Table 18-1. Why do the Inventory, Customers, and Suppliers tables all have an attribute that contains data about the balance at the beginning of the current fiscal period? SUGGESTED ANSWERS TO THE PROBLEMS 18.1 Refer to Problems 17.1 and 17.2 for information about the revenue and expenditure cycle activities for Joe's ice-cream shop in order to draw an integrated REA diagram of both cycles. 18.2 Develop a set of tables to implement the integrated REA diagram you developed in Problem 18.1 for Joe's ice-cream shop in a relational database. Specify a primary key for each table, and suggest at least one other attribute that should be included in each table. Refer to Problems 17.3 and 17.4 for information about Sue's Gallery's revenue and expenditure cycle activities in order to draw an integrated REA diagram of both cycles.
  28. 28. 16.3 Develop a set of tables to implement the integrated REA diagram you developed in Problem 18.3 for Sue's Gallery in a relational database. Specify a primary key for each table, and suggest at least one other attribute that should be included in each table. 16.4 The following tables and attributes exist in a relational database: 18.6 Refer to Problems 17.8 and 17.9 for information about the revenue and expenditure cycles for the Computer Warehouse and use that information to draw an integrated REA diagram for both cycles. 18.7 Develop a set of tables to implement the integrated REA diagram you developed in Problem 17.6 for the Computer Warehouse in a relational database. Specify a primary key for each table, and suggest at least one other attribute that should be included in each table. 18.8 Explain how to calculate the total amount of accounts payable: 18.9 Refer to Figure 18.4 and Table 18-1 to write the query logic needed to answer the following questions. (Optional: If requested by your instructor, write your queries in SQL or a Query-By- Example graphical interface.) Some answers may require more than one query—try to write the most efficient queries possible. 18.10 Refer to Problem 17.10 and develop a set of tables to implement the REA diagram you developed for Stan's Southern Barbeque Supply Store. Identify the primary and foreign keys for each table, and don't forget to address any M:N relationships. SUGGESTED ANSWERS TO THE CASES 18.1 The specific solution will vary depending upon the DBMS and REA data model used. CHAPTER 19 SPECIAL TOPICS IN REA MODELING SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 19.1 Often it takes several sales calls to obtain the first order from a new customer. Why then does Figure 19-1 depict the relationship between the Call on Customer and Take Customer Order events as being 1:1? 19.2 How could an automobile dealer model the use of loaner cars, which it gives to customers for free whenever they drop off a vehicle for maintenance that will take longer than one day to complete? 19.3 In what situations would you expect to model a relationship between an agent and a resource? 19.4 Why is depreciation not represented as an event in the REA data model? 19.5 How would you model the acquisition of a digital asset, such as the purchase of software online (the software is downloaded and then installed on the purchaser's computer)? 19.6 How are the similarities and differences between the purchase of services, such as telephone service, and the purchase of raw materials reflected in an REA data model? 19.7 How would you modify the expenditure cycle REA diagram in Figure 19-4 to include the return of defective products to suppliers for credit? SUGGESTED ANSWERS TO PROBLEMS
  29. 29. 19.1 We-Fix-Computers, Inc. provides spare parts and service for a wide variety of computers. Customers may purchase parts to take home for do-it-yourself repairs, or they may bring their systems in for repair, in which case they pay for both the parts and the labor associated with the type of service required. Some services do not include any new parts, just a labor charge for that service. Individual customers must pay for all parts purchases in full at the time of sale. Individual customers must pay 50% down when they bring their computers in for servicing and pay the balance at pickup. Corporate customers, however, are billed monthly for all sales (parts or service). Although We-Fix-Computers, Inc. has several different banking accounts, all sales are deposited intact into its main checking account. 19.2 The Mesa Veterinary Hospital is run by Dr. Brigitte Roosevelt. She has two employees in the office and has asked you to develop a database to help better track her data. Dr. Roosevelt currently uses her personal computer only for word processing, but she is interested in also using it to maintain pet histories and accounting information. She is excited about the transition and is counting on you to help her through the process. She describes her daily activities as follows: 19.3 Your university hires you to implement a database system for the library network. You have interviewed several librarians, and the following summarizes these discussions: 19.4 The XYZ Company sells tools and parts to automotive repair shops. Shops call in orders; all orders received by noon are delivered the same day. Between 12:00 and 1:00, the system prints out schedules. From 1:00 to 5:00, drivers make deliveries according to the printed schedules. Typically, each driver makes between 25 and 30 deliveries each day. Each delivery is signed for by a repair shop manager; the portable laptop then uses wireless communications to transmit information about the delivery back to the XYZ Company and the information is recorded as another row in the sales event table. The XYZ Company uses its own trucks to make local deliveries to its customers. It wants to track information about the use of those trucks: which employee drove which truck, to which customers did a particular truck make deliveries, which deliveries are made on which days, what was the starting and stopping mileage each day? 19.6 Bernie's Pet Store sells pet food, toys, and supplies. Bernie, the owner, is the only person who places orders with suppliers. He is also the only person who writes checks. Suppliers ship each order individually; if they are out of an item, they back order it and ship it separately as soon as it arrives. Bernie pays each supplier monthly for all purchases made the previous month. Suppliers do not allow him to make installment payments. 19.7 At Big Time University (BTU) students are allowed to purchase two basketball tickets for each home game. Each ticket contains the date of the game, and the seat information, such as section, row, and individual seat number. Students pay for each game individually; that is, student sporting event passes are not used at BTU. BTU deposits the proceeds from each game into its bank. 19.8 Small contractors often rent special equipment for specific jobs. They need to track the equipment that is rented, when it is returned, and payments made to the rental company. SUGGESTED ANSWERS TO THE CASES Case 19.1 This case involves creating a database from an integrated REA diagram and then using the REA diagram to guide the writing of queries to prepare financial statements.
  30. 30. CHAPTER 20 INTRODUCTIONTO SYSTEMS DEVELOPMENT;SYSTEMS ANALYSIS SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 20.1 The approach to long-range AIS planning described in this chapter is important for large organizations with extensive investments in computer facilities. Should small organizations with far fewer information systems employees attempt to implement planning programs? Why or why not? Be prepared to defend your position to the class. 20.2 You are a consultant advising a firm on the design and implementation of a new system. Management has decided to let severalemployees go after the system is implemented. Some have many years of company service. 20.3 While reviewing a list of benefits from a computer vendor's proposal, you note an item that reads, "Improvements in management decision making—$50,000 per year." How would you interpret this item? What influence should it have on the economic feasibility and the computer acquisition decision? 20.4 For each of the following, discuss which data-gathering method(s) are most appropriate and why: 20.5 The following problem situations occurred in a manufacturing firm. What questions should you ask to understand the problem? 20.6 Give some examples of systems analysis decisions that involve a trade-off between each of the following pairs of objectives: 20.7 For years, Jerry Jingle's dairy production facilities led the state in sales volume but recent declines worry him. Customers are satisfied with his products but are troubled by the dairy's late deliveries and incomplete orders. Production employees (not the cows) are concerned about bottlenecks in milk pasteurization and homogenization due to poor job scheduling, mix-ups in customers' orders, and improperly labeled products. How should Jerry address the problems? What data-gathering techniques would be helpful at this early stage? 20.8 A manufacturing firm needed a specialized software program to identify and monitor cost overruns. After an extensive analysis, the company purchased prepackaged software and assigned three programmers to modify it to meet its individual circumstances and processes. After six months of work, during final testing, the company told them to stop all work until further notice. While reading the software vendor's sales agreement, the manufacturing manager found a clause stating that the software could not be changed without the prior written consent of the vendor. The firm had to pay the software vendor an additional fee so it could use the modified software in its manufacturing process. Which aspect(s) of feasibility did the manufacturing firm failed to consider prior to purchasing the software. 20.9 Ajax Manufacturing installed a new bar code based inventory tracking system in its SUGGESTED ANSWERS TO THE PROBLEMS 20.1 How do you get a grizzled veteran police officer who is used to filling out paper forms to use 20.2 Mary Smith is the bookkeeper for Dave's Distributing Company, a distributor of soft drinks 20.3 Wright Company's information systemwas developed in stages overthe past five years. During the 20.4 The controller of Tim's Travel (TT) is deciding between upgrading the company's existing 20.5. Rossco is considering the purchase of a new computer with the following estimated costs: 20.6 A recently completed feasibility study to upgrade XYZ's computer system shows the
  31. 31. 20.7 The following list presents specific project activities and their scheduled starting and completion times: 20.8 Recent years have brought an explosive growth in electronic communication. Laptops, 20.9 PWR manufactures precision nozzles for fire hoses. Ronald Paige, an engineer, started the 20.10 Businesses often modify or replace their financial information system to keep pace with 20.11 Don Richardson, JEM Corporation's vice president of marketing, is part of a management 20.12 Remnants, Inc., with headquarters in St. Louis, manufactures designer clothing. The company 20.13 Managers at some companies face an ongoing systems development crisis: IS departments 20.14 Joanne Grey, a senior consultant, and David Young, a junior consultant, are conducting a SUGGESTED ANSWERS TO THE CASES 20-1 Audio Visual Corporation (AVC) manufactures and sells visual display equipment. CHAPTER 21 AIS DEVELOPMENT STRATEGIES SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 21.1 What is the accountant's role in the computer acquisition process? Should the accountant play an active role, or should all the work be left to computer experts? In what aspects of computer acquisition might an accountant provide a useful contribution? 21.2 In a Midwest city of 45,000, a computer was purchased and in-house programmers began developing programs. Four years later, only one incomplete and poorly functioning application had been developed, none of software met users' minimum requirements, and the hardware and the software frequently failed. Why do you think the city was unable to produce quality, workable software? Would the city have been better off purchasing software? Could the city have found software that met its needs? Why or why not? 21.3 You are a systems consultant for Ernst, Price,and Deloitte, CPAs. At your country club's annual golf tournament, Frank Fender, an automobile dealer, describes a proposal from Turnkey Systems and asks for your opinion. The system will handle inventories, receivables, payroll, accounts payable, and general ledger accounting. Turnkey personnel would install the $40,000 system and train Fender's employees. Identify the major themes you would touch on in responding to Fender. Identify the advantages and disadvantages of using a turnkey system to operate the organization's accounting system. 21.4 Sara Jones owns a rapidly growing retail store that faces stiff competition due to poor customer service, late and error-prone billing, and inefficient inventory control. To continue its growth, its AIS must be upgraded but Sara is not sure what it wants the AIS to accomplish. Sara has heard about prototyping, but does not know what it is or whether it would help. How would you explain prototyping to Sara? Include an explanation of its advantages and disadvantages as well as when its use is appropriate. 21.5 Clint Grace has been business over 30 years and has definite ideas about how his ten retail stores should be run. He is financially conservative and is reluctant to make expenditures that do not have a clear financial payoff. Store profitability has declined sharply and customer dissatisfaction is high. Store managers never know how much inventory is on hand and when purchases are needed until a shelf is empty. Clint asks you to determine why profitability has declined and to recommend a solution. You determine that the current AIS is inefficient and unreliable and that company processes and procedures are out of date. You believe the solution is to redesign the systems and business processes using BPM.
  32. 32. What are some challenges you might face in redesigning the system? How will you present your recommendations Clint? SUGGESTED ANSWERS TO THE PROBLEMS 21.1 Don Otno has been researching software options but cannot decide among three alternatives. 21.3 Wong Engineering Corp (WEC) operates in 25 states and three countries. WEC faced a 21.4 Mark Mitton, the liaison to the IS department, has eliminated all but the best three systems. 21.5 Nielsen Marketing Research (NMR),with operations in 29 countries, produces and 21.6 A large organization had 18 months to replace its old customer information system with a 21.7 Meredith Corporation publishes books and magazines, owns and operates television stations, 21.8 Norcom, a division of a large manufacturer,needed a new distribution and customer service 21.9 Quickfix is rapidly losing business, and management wants to redesign its computer repair 21.10 Conduct a search (using written materials, the Internet, electronic databases,etc.) for SUGGESTED ANSWERS TO THE CASES 21-1 Steve Cowan owns Professional Salon Concepts (PSC),a hair salon products distribution CHAPTER 22 SYSTEMS DESIGN, IMPLEMENTATION, AND OPERATION SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 22.1 Prism Glass is converting to a new information system. To expedite and speed up implementation, the CEO asked your consulting team to postpone establishing standards and controls until after the system is fully operational. How should you respond to the CEO's request? 22.2 When a company converts from one system to another, many areas within the organization are affected. Explain how conversion to a new system will affect the following groups, both individually and collectively. 22.3 The following notice was posted in the employee cafeteria on Monday morning: To: All Accounting and Clerical Employees From: I.M. Krewel, President 22.4 In which phase of the systems development life cycle would each of the following positions be most actively involved? Justify your answers. 22.5 During which of the five SDLC stages is each task,labeled (a) through (m), performed? More than one answer may apply for each activity. SUGGESTED ANSWERS TO THE PROBLEMS 22.1 You were hired to manage the accounting and control functions at the Glass Jewelry Company. During your introductory meeting, the president asked you to design and implement a new AIS within six months. Company sales for the past year were $10 million, and they are expected to double in the next 18 months.
  33. 33. 22.2 Wang Lab's tremendous growth left the company with a serious problem. Customers would often wait months for Wang to fill orders and process invoices. Repeated attempts by 22.3 Tiny Toddlers, a manufacturer of children's toys and furniture, is designing and 22.4 Mickie Louderman is the new assistant controller of Pickens Publishers. She was the 22.5 Ryon Pulsipher, manager of Columbia's property accounting division, has had difficulty 22.6 A credit union is developing a new AIS. The internal auditors suggest planning the systems 22.7 MetLife, an insurance company, spent $11 billion to acquire Travelers Life and Annuity from 22.8 During final testing, just before launching a new payroll system, the project manager at 22.9 A new program at Jones and Carter Corporation (JCC) was supposed to track customer SUGGESTED ANSWERS TO THE CASES 22.1 Citizen's Gas Company (CGC) provides natural gas service to 200,000 customers. The customer base is divided into the following three revenue classes: 2. Identify the data that should be incorporated into CGC's new system to provide adequate planning capability. Explain why each data item it is important and the level of detail needed for the data to be useful. Download Here

Pearson Accounting Information System Solution Manual Chapter 3

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