Gelinas AIS 9e Ch 04 solutions PDF

Preview

Summary

very good document...

Description

Accounting Information Systems, 9e

1

SOLUTIONS FOR CHAPTER 4 Each end-of-chapter question in the Solutions Manual is tagged to correspond with AACSB, AICPA and CISA standards, allowing professors to more easily manage the task of reporting outcomes to these professional and accrediting bodies. Please see the corresponding spreadsheet file for the tagging information.

Discussion Questions DQ 4-1

“Data flow diagrams and systems flowcharts provide redundant pictures of an information system (or business process). We don’t need both.” Discuss fully.

ANS.

Logical data flow diagrams (DFDs) present only the logical elements of an information system. By excluding the physical elements, the logical DFD allows us to concentrate on what a system is doing without being distracted by how the functions are being performed and by whom. Physical DFDs present the physical elements of an information system. They concentrate on who or what is acting on the data flowing through the system. Physical DFDs allow us to concentrate on the entities involved in processing information. We can also see how much work is done by an entity by observing the flows into and out of an entity and whether those flows change names, which is an indication that they have been transformed within the entity. Finally, a systems flowchart presents the logical and the physical details of an information system’s functions and related operations activities. It shows the details of how a process is accomplished and also shows the organizational unit that performs the process. As we will see in Chapter 9, these details are necessary to permit evaluation of a system’s controls. In conclusion, all of these diagrams are needed to get a complete picture of an information systems (or business process). As noted previously, however, each diagram has its function and, depending on our purpose, all may not be needed.

DQ 4-2

“It is easier to learn to prepare data flow diagrams, which use only a few symbols, than it is to learn to prepare systems flowcharts, which use a number of different symbols.” Discuss fully.

2

Solutions for Chapter 4

ANS.

Compare the DFD symbols in Figure 4.1 to the flowcharting symbols in Figure 4.6 and you will probably conclude that it is easy to learn the DFD symbols. Examine Figure 4.7 and see that there are several standard routines used in flowcharts. We believe that constructing DFDs presents fewer problems in determining layout and placement of symbols. But determining logical groupings for a logical DFD might be difficult for you. We conclude, however, that DFDs are easier to construct than are flowcharts. You might have a different opinion.

DQ 4-3

Describe the who, what, where, and how of the following scenario. A customer gives his purchase to a sales clerk, who enters the sale in a cash register and puts the money in the register drawer. At the end of the day, the sales clerk gives the cash and the register tape to the cashier.

ANS.

Who: The sales clerk performs the information processing activities. What: (1)

Give purchase to sales clerk.

(2)

Enter sale in register (if it is an electronic register, data stores could be updated).

(3)

Put money in drawer.

(4)

Give cash and register tape to cashier.

Where: Store (at the check-out counter). How: A manual process is performed by the sales clerk using a cash register. DQ 4-4

Why are many correct logical DFD solutions possible? Why is only one correct physical DFD solution possible?

ANS.

For each sensible grouping of logical activities, there is a correct logical DFD. And, because many sensible groupings are possible, multiple correct solutions exist. However, only one correct physical DFD is possible for each system because these diagrams are constructed directly from a description of the system. A physical DFD presents a one-to-one correspondence among entities, physical data stores, and data flows, as described in the narrative, leaving little or no room for interpretation.

DQ 4-5

Explain why a flow from a higher- to a lower-numbered bubble on a logical DFD is a physical manifestation of the system. Give an example.

Accounting Information Systems, 9e

3

ANS.

If we feel that we must send a data flow from one bubble on a logical DFD to a bubble on that diagram with a lower number, then we must have a picture in our mind of that lower-numbered bubble as a person, place, or thing rather than a logical activity. If you have such a picture, your diagram will represent a physical description of the system, regardless of the labels that we might assign to the flows and to the bubbles. Let’s use Figure 4.11 for an example. What if the narrative had stated that the “Sales order acknowledgement” went to the sales rep and then to the customer? How would the logical DFD change? Would you want to send the acknowledgement to bubble number 1.0 because you thought that bubble 1.0 was the sales rep? If you did that, you would have a physical data flow, because you pictured bubble 1.0 as a person, place, or thing rather than as a function. That would be a mistake in constructing a logical DFD.

DQ 4-6

Compare and contrast the purpose of and techniques used in drawing physical DFDs and logical DFDs.

ANS.

We draw physical DFDs to depict a system’s entities—both internal and external —and to characterize the communications between those entities. We draw logical DFDs to describe the functions—or information processing activities— performed by the system. We use the same symbols for drawing logical and physical DFDs. However, the way we use those symbols differs. In a physical DFD, the bubbles are labeled with the names of entities, whereas in a logical DFD, the bubble labels describe the functions being performed. In a physical DFD, the labels on the data flows and on the data stores are specific names that describe the method used for communicating and storing data, whereas in a logical DFD, those labels are generic descriptions or names that describe the data.

DQ 4-7

“If we document a system with a system flowchart and data flow diagrams, we have overdocumented the system.” Discuss fully.

ANS.

We don’t agree with this statement. Each tool depicts different aspects of a system and is used for different purposes. A systems flowchart depicts a system’s information and operations activities (i.e., a business process) and superimposes those activities onto the organization’s structure. We use the flowchart to understand the system’s activities—both information and operations—and to analyze the system’s controls. Data flow diagrams concentrate on the data, the entities that act on the data, and the information systems functions being performed by a system. We use the DFDs to analyze each of these elements of a system. Also, we use the logical DFD extensively in the development of new systems.

DQ 4-8

“Preparing a table of entities and activities as the first step in documenting systems seems to be unnecessary and unduly cumbersome. It would be a lot easier to bypass this step and get right to the necessary business of actually drawing the diagrams.” Do you agree? Discuss fully.

4

Solutions for Chapter 4

ANS.

We don’t agree. With practice, preparation of a table of entities and activities is not difficult. Also, we find that we prefer to prepare this table before drawing any diagrams because the table helps us to clarify ambiguities in the narrative, lay out the diagrams, avoid mistakes, and minimize the need for redrawing.

DQ 4-9

“PCAOB Audit Standard No. 5 (AS5) paragraph 37 and Statement on Auditing Standard Section 319 (AU 319) paragraph 75 suggest that management, business process owners, and auditors prepare and analyze systems documentation to understand the flow of transactions through a process and to identify and assess the effectiveness of the design of internal controls. However, organizations, internal audit departments, and public accounting firms have developed their own methods for documenting systems. Therefore, I am not going to learn to prepare systems documentation until I know exactly what technique I will need to use in my job.” Do you agree? Discuss fully.

ANS.

We don’t agree. After you learn any systems documentation technique, learning the next technique will be easier. There are several skills that are developed while learning to document systems, including preparing a complete, understandable narrative; preparing a good picture to correctly depict the system; and using the documentation to analyze the efficiency, effectiveness, and controls in a system. To prepare good systems documentation, you must learn to understand and represent the logic flows; activities, both manual and automated; data flows; and data stores in a business process. When you can do that with one documentation technique, you can do it with any technique.

DQ 4-10

“Because there are computer-based documentation products that can draw data flow diagrams and systems flowcharts, learning to draw them manually is a waste of time.” Do you agree? Discuss fully.

ANS.

We disagree, partly. We have used several computer-based documentation packages and believe that you must know something about drawing DFDs and systems flowcharts before you can use such packages effectively. However, you might develop your documenting skills more quickly by using such a package rather than by practicing manual diagram preparation because you can revise and improve your drafts more quickly with a package than you can on paper. This might be analogous to the situation in our English department where there is a belief that students can be better writers, if they learn to write using a word processing package because they can quickly prepare, revise, and improve their writing assignments.

Short Problems

Accounting Information Systems, 9e

5

Note to Instructors: Additional problems can be created from the diagrams and solutions for these problems. For example, you could provide the students with a narrative and a partially completed diagram requiring that the students fill in the missing parts of the diagram. Or you could provide the diagram and a partially completed narrative and require that the students fill in the blanks in the narrative. Finally, you can provide students with a table of entities and activities and require that they prepare one or more diagrams.

6

Solutions for Chapter 4

SP 4-1 ANS. a. Table of Entities and Activities for Webster, Inc. Entities IT division

Para

Activities

1

1.

Print statements.

1

2.

Send statements to accounts receivable department.

Accounts receivable

1

3.

Mail statements to customers.

Customers

1

4.

Mail payments to Webster.

Accounts receivable

1

5.

Batch checks.

1

6.

Send checks to cashier.

1

7.

Enter payments.

8.

Update accounts receivable master data.

Cashier

1

Computer (IT division)

1

FIGURE SM-4.1

Short Problem 1 part b solution—context diagram—for Webster, Inc.

FIGURE SM-4.2

Short Problem 2 solution—physical DFD—for Webster, Inc.

Accounting Information Systems, 9e

SP 4-3 ANS. a. Annotated Table of Entities and Activities for Webster, Inc. Entities IT Division (computer) Accounts receivable

IT Division (computer)

FIGURE SM-4.3

Para 1

Activities 1. Print statements.

1

5.

Batch checks.

1

6.

Enter payments.

1

8.

Update accounts receivable master data.

Process 1.0 Bill customers. 2.0 Record payments.

Short Problem 3 part b solution—logical DFD—for Webster, Inc.

7

8

Solutions for Chapter 4

Accounting Information Systems, 6e 4-3

FIGURE SM-4.4

Short Problem 4 solution—systems flowchart—for Webster, Inc.

Accounting Information Systems, 9e

9

SP 4-5 ANS. a. 3

h. 8

b. 10

i. no match

c. 2

j. 4

d. no match

k. 1

e. 5

l. 6

f. 7

m. 9

g. no match

n. no match

Problems P 4-1 ANS.

At the company’s sales office, sales representatives answer customer calls and enter customer orders into the computer. The computer accesses the Inventory master data (on disk) to determine the availability and prices for the items requested. Also, the computer accesses the Customer master data (on disk) to determine the customer’s credit limit and compares that limit to the balance outstanding on the Accounts receivable master data (on disk) and to the amount of the order. Next, the computer updates the inventory master data (we assume to reduce the balance on hand) and notifies the clerk that the order has been accepted. The clerk acknowledges the order to the customer by phone. Also, the computer prints a two-part picking ticket for the warehouse. In the warehouse, clerks annotate the picking ticket (we assume that it is annotated with the quantities picked), file copy 2 in the warehouse, and send copy 1 to shipping (we assume that it is sent along with the goods). In shipping, clerks prepare a two-part packing slip, file copy 2 with the annotated picking ticket, and give copy 1 to the carrier (we assume that the packing slip is attached to the goods).

P 4-2 ANS.

Customers contact this company with a request for services. A contract is prepared and filed in the Contract file, and a copy of the contract is given to the customer. Using an Hours Worked report received from the Operations office, the hours worked are recorded into the Hours Worked file.

10

Solutions for Chapter 4

Periodically, monthly statements are prepared using data from the Contract file and the Hours Worked file. The statements are sent to the customers, and the Accounts receivable master data is updated (we assume with the new amounts due). At the same time, a Contracts Not Billed report is prepared and sent to the Sales office. P 4-3 ANS.

As a customer order is received at the Central sales office, a sales clerk enters the order into the computer. The computer reviews the order, checks the customer’s credit (by comparing the credit limit in the Customer master data to the amount of the order plus the balance outstanding on the Accounts receivable master data and the orders outstanding on the Sales order master data) and logs the order on the System log. After the computer has notified the sales clerk that the order has been accepted, the clerk records the order on the Clerk’s log (a manual log book). Next, the computer checks for available inventory on the Inventory master data disk and prints a packing slip on a printer located at one of the company’s regional warehouses. The order is recorded on the Sales order master data disk. As orders are filled at the warehouse, a filled order document is sent to the warehouse supervisor, who then enters the order (order number and quantities shipped) into the computer. The computer records the shipment by updating the Inventory master data and the Sales order master data and creating a record on the Sales journal data store. The supervisor then files the filled orders (by order number). At the end of each day, the computer prints a list of the orders entered that day (the Daily event log) by reading them from the System log. The list is sent to the central sales office, where clerks compare it to the manual log that they have kept throughout the day. Errors are investigated.

Accounting Information Systems, 9e

Problems 4 through 7 Solutions for Good Buy, Inc. P 4-4 ANS.

a. Table of Entities and Activities for Good Buy, Inc.

Entities

Para

Customer

1

1.

Log on to Web site.

Web server

1

2.

Request current catalog.

ERP system

1

3.

Send current catalog (assumes read and format catalog data).

Web server

1

4.

Display catalog.

Customer

1

5.

Select items and quantities.

Web server

1

6.

Edit customer input (items and quantities) for accuracy.

1

7.

Send requested items and quantities to ERP system.

1

8.

Allocate inventory.

1

9.

Send allocated items and quantities to Web server.

Web server

1

10. Display allocated items and quantities on customer screen.

Customer

1

11. Verify that order is correct.

1

12. Enter shipping and credit card information.

1

13. Edit customer input (shipping and credit card information) for accuracy.

1

14. Send credit card information and amount of sale to credit card company.

Credit card company

1

15. Send verification number to Web server.

Web server

1

16. Display confirmation number on customer screen.

1

17. Notify ERP system that sales have been completed.

1

18. Change inventory status from allocated to sold.

1

19. Print picking ticket/packing slip in warehouse.

1

20. Record sale and accounts receivable.

ERP system

Web server

ERP system

Warehouse

Activities

11

12

Solutions for Chapter 4

FIGURE SM-4.5

Problem 4 part b solution—context diagram—for Good Buy, Inc.

FIGURE SM-4.6

Problem 5 solution—physical DFD—for Good Buy, Inc.

Accounting Information Systems, 9e

P 4-6 ANS.

a. Annotated Table of Entities and Activities for Good Buy, Inc.

Entities

Para

Activities

Customer

1

1.

Log on to Web site.

Web server

1

2.

Request current catalog.

ERP System

1

3.

Send current catalog (assumes read and format catalog data).

Web server

1

4.

Display catalog.

Customer

1

5.

Select items and quantities.

Web server

1

6.

Edit customer input (items and quantities) for accuracy.

ERP System

1

8.

Allocate inventory.

Web server

1

10. Display allocated items and quantities on customer screen

Customer

...