SOLUTIONS MANUAL for Accounting Information Systems 2nd Edition. Vernon Richardson Janie Chang Rodne by digitaldownload87

Accounting Information Systems 2e Vernon Richardson Janie Chang Rodney Smith (Solutions Manual All Chapters, 100% Original Verified, A+ Grade) All Chapters Solutions Manual Supplement files download link at the end of this file. Chapter 1 – Accounting Information Systems and Firm Value Multiple Choice Questions 1. c 2. d 3. a 4. c 5. d 6. b 7. d 8. a 9. d 10. b 11. b 12. c 13. a 14. c 15. a

Discussion Questions 1. Brainstorm a list of discretionary information that might be an output of an accounting information system and be needed by Starbucks. Prioritize which items might be most important and provide support. Answers will vary. Here are some potential answers: The cost of a cup of coffee, by type: Breakfast blend, Cafe estima, caffe Verona, espresso roast, Ethiopia sidamo, french roast, Gold coast blend, Guatemala Antigua, house blend, Italian roast, Kenya coffee, komodo dragon blend, organic Serena blend, organic shade grown Mexico, sumatra, decaf caffe Verona, decaf espresso roast, decaf house blend, and decaf Sumatra!

Monthly Sales per square foot of retail space. Employee cost for each operating hour. Advertising expenditures per dollar of sales. The cost of condiments per dollar sales of coffee. Condiments might include sweeteners, liquid creamers, cream canisters, sugar packets, sugar canisters, stir sticks! The cost of electricity per operating hour each month of the year.

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 1

2. Explain the information value chain. How do business events turn into data then into information and then into knowledge? Give an example starting with the business event of the purchase of a DVD at Best Buy all the way to useful information for the CEO and other decision makers. The information value chain represents the overall transformation from a business need and business event (like each individual sale of U.S. flag) to an ultimate decision. The information value chain might be represented considering the purchase of a DVD at Best Buy in the following way: The DVD will be recorded as sales revenue and then after deducting its costs will add to or subtract from corporate income. The cash from the DVD sale will also add to the operating cash flows. The specific DVD will be recorded in the information as a sale to monitor which DVDs are selling within Best Buy. This will help Best Buy and its suppliers know which DVDs are selling and which type of DVDs should be reordered. The type of DVD will also help the marketing department better understand its customers and their respective demographic profile to better market to them. In addition, knowing the location of the DVD sale will also help decision makers know where its sales are occurring. The CEO can look at the profitability of DVDs overall, the specific types of DVDs that are selling and the location of those sales all due to the information value chain. 3. Give three examples of types of discretionary information at your college or university and explain how the benefits of receiving that information outweigh the costs. Answers will vary. This represents a potential answer. Universities are often interested in their freshmen retention (the percentage of sophomores that return after their freshman year). They also quite interested in their four- or five-year graduation rates. Universities are also interested in their production of research grants. This is often used to monitor the success of their research and their ability to get interested sponsors (such as the National Institute of Health or the National Science Foundation). Information for each of these three examples can be gained by the information system at the university. However, a university generic information system does not usually offer this information as a standard report or standard output of the system. Therefore, work must be done to capture (and potentially digitize) this information, ensure its validity and then report it in an appropriate useful format. The cost of getting useful information will depend on the university and its technology. However, since these represent three keys metrics of a university

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 1

and will likely be used as a key input to manage the university, the benefits will potentially outweigh those costs. 4. After a NBA basketball game a box score is produced detailing the number of points scored, assists made and rebounds retrieved (among other statistics). Using the characteristics of useful information discussed at the beginning of the chapter, please explain how this box score meets (or does not meet) the characteristics of useful information. A box score of a NBA basketball game (or other sports) produces overall team statistics by half and quarter and details player performance including minutes played, shots taken, shots made, free throw shots taken and made, assists, rebounds, steals, blocks and fouls. To be relevant, the information must potentially impact a decision that a decision maker must make. Relevant information is usually characterized by having predictive value, feedback value and receiving it on a timely basis. This information provides feedback value to explain how players performed in the game. The box score provides predictive value to the extent that prior performance (as reflected in the box score) is predictive of future performance. Since box scores are available immediately following the game, it is also received on a timely enough basis to make decisions for a subsequent game. To be reliable, the information must be verifiable, be representationally faithful and be neutral. There are often some allegations that the statistics included in a box score is affected by the bias of the scorekeeper. While the actual points scored by the team is verified by the officials, more minute details are not verified and may be subject to bias, thus limiting their reliability. The information is potentially relevant to the coach in helping to figure out which players are most efficient and productive. Which players play well against different teams and which players are good at particular aspects of offense and defense, among others. 5. Some would argue that the role of accounting is simply as an information provider. Will a computer ultimately completely take over the job of the accountant? As part of your explanation, explain how the role of accountants in information systems continues to evolve. Accountants have a role as a business analyst. That is, they gather information to solve business problems or address business opportunities. They determine what information is relevant in solving business problems, then create or extract that information and finally analyze the information to solve the problem. An AIS provides a systematic means for accountants to get needed information and solve a problem. While a computer is very good at reliably collecting, processing and producing information, the role of the accountant when serving as a business analyst will continue to be able to assess the problems the business is facing and work to provide information that will address it. ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 1

6. How do you become a Certified Information Technology Professional (CITP)? What do they do on a daily basis? A CPA can earn a CITP designation with a combination of business experience, lifelong learning and an optional exam. The CITP designation identifies accountants (CPAs) with a broad range of technology knowledge and experience. On a daily basis, CITPs may help devise a more efficient financial reporting system, help figure out how an information system can provide needed decision-relevant information, help the accounting function go paperless or consult on how an IT function may transform the business. 7. Explain the value chain for an appliance manufacturer, particularly the primary activities. Which activities are most crucial for value creation (or in other words, which activities would you want to make sure are the most effective)? Rank the five value-chain enhancing activities in importance for an appliance manufacturer. The value chain goes all the way from product design, through sourcing to manufacturing to shipping the final product to the warranty and repair business. Many would consider the product design, which ensures that the appliance has the desired functionality at the right priced points, to be a critical activity for value creation. Sourcing the product components to low cost, yet high quality component providers is also key to creating value. Final assembly (or operations) of the product components is also key to ensuring high product quality at reasonable prices. Marketing the final product through appropriate distribution channels and supporting the final product through the warranty and repair process also are crucial parts of the value chain. My opinion of the ranking of the five primary activities would be that product design would be the most important, then sourcing (inbound logistics), then marketing, then warranty and repair and finally final assembly (or operations). 8. Which value chain supporting activities would most be most important to support a health insurance provider’s primary activities? How about the most important primary activities for a university? Of course, all of the supporting activities are important. Human Resources perhaps can be viewed as most important to make sure the right nurses and right doctors with the appropriate skills are available at the right time to service the sick and injured. Technology is increasingly becoming an important part of hospitals, especially with the digital medical records are becoming increasingly available and useful. Certainly, other arguments can be made for other supporting activities. The primary activities of a university would be to attract students, educate them and then helping them find a good job once they have graduated. Educating students is probably the most important primary activities in the university as that is its primary mission.

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 1

9. List and explain three ways that an AIS can add value to the firm. Accounting Information Systems add value by providing decision relevant information to management. Three specific examples would include the following: Customer relationship management (CRM) techniques could attract new customers, generating additional sales revenue. Enterprise systems can significantly lower the cost of support processes included. Supply Chain Management Software allows firms to carry the right inventory and have it in the right place at the right time. 10. Where does new product development fit in the value chain for a pharmaceutical company? Where does new product development for a car manufacturer fit in the value chain? The support activity of technology generally would include research and development for both a pharmaceutical company as well as a car manufacturer. In either case, this is a support activity that can drive the value for a company. 11. An enterprise system is a centralized database that collects and distributes information throughout the firm. What type of financial information would be useful for both the marketing and manufacturing operations might both need? Both marketing and manufacturing operations might both need records of the past sales as well as projections of which products are selling best. For the marketing group, this information would be helpful to optimize marketing campaigns, understand the demographics of the customer, and make predictions of future products. Manufacturing operations might need product information to decide which products to produce as well as needed changes to be able to produce future products. The enterprise systems might be able to provide answers to questions like, what manufacturing equipment might be needed to produce new products or is the existing manufacturing capacity sufficient to fulfill future product needs. 12. Customer Relationship Management software is used to manage and nurture a firm’s interactions with its current and potential clients. What information would Boeing want about its current and potential airplane customers? Why is this so critical? For Boeing, understanding its customers is of paramount importance. Boeing would want to know who their potential customers are, who the key contacts are, what the customer’s business models are (e.g., short flights, long flights, fuel efficiency, loads on each flight, cargo volume and capacity, etc., who their key supplier has been in the past (Boeing, Airbus, etc.) , what they value in a plane manufacturer (e.g., financing, customer service, after sale service, parts, etc.). This information is critical as it helps Boeing tailor its offering and propose new offerings based on the needs of the customer.

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 1

Problems (Note – Problems with “Connect” in parentheses below are available for assignment within Connect.) 1. (Connect) A recent article suggests: A monumental change is emerging in accounting: the movement away from the decades-old method of periodic financial statement reporting and its lengthy closing process, and toward issuing financial statements on a real-time, updated basis . . . realtime financial reporting provides financial information on a daily basis. Current technology allows for financial events to be identified, measured, recorded, and reported electronically, with no paper documentation. (Source: “Real-Time Accounting,” The CPA Journal, April 2005). Indeed, many corporations are pressing their finance and accounting departments for more timely financial information and ad hoc analysis. Would a shift toward real-time financial statements make the financial information more useful or less useful? More or less relevant? More or less reliable? It may be useful to stakeholders if some accounts are reported on a daily basis, such as sales revenue or employee expenses, as long as that information is reliable. Other accounts are only needed periodically, such as estimates and allowance accounts, so real-time reporting would be less useful. As information becomes more timely, it generally becomes more relevant. A stakeholder could make decisions based on current account balances versus the balances reported two-to-three months ago. Even periodic data that was reported daily would provide insight into when estimates are generated and adjusted. However, there is a risk that real-time reporting will be less reliable. Periodic financial statements are reviewed for errors and audited. Real-time reports would be more likely to include material errors that could result in poor decisions by stakeholders. Managers would need to provide better controls or disclose the risks if others are to use the information. 2. Consider the bar chart below of how accounting professionals’ activities have changed over time. Comment on how information technology affects the role of accountants. In what respects is this a positive trend or a negative trend? What will this bar chart look like in 2020?

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 1

Continuous Evolution in Accounting Professional Activities 70

1999

Percent

2003

2006

2009

Transactional activities

Control activities

Decision support

Source: The Agile CFO: A Study of 900 CFOs Worldwide, IBM, 2006. By 2020, many expect the trend from transactional activities to decision support systems would continue. I view this as a positive trend, consistent with one of the themes for chapter 1, that accountants are business analysts, helping businesses to address business opportunities. As noted in the chapters, these opportunities might include a decision whether to outsource a business function, whether to produce one product or another based on which is most profitable, or whether to pursue an attempt to minimize taxes, etc. To address such a business opportunity, the accountants need to decide what information is needed, then build an information system to gather the necessary information and finally analyze that information to offer helpful advice to management. I would expect this trend will continue through 2020 and beyond.

(Connect) Match the value chain activity in the left column with the scenario in the right column. 1. 2. 3. 4. 5. 6. 7.

Service Activities matches best with B. Warranty Work Inbound Logistics matches best with F. Receiving dock for raw materials Marketing and sales activities matches best with A. Surveys for prospective customers Firm Infrastructure matches best with G. CEO and CFO Human Resource Management matches best with I. Worker recruitment Technology matches best with E. New-product development Procurement matches best with H. Buying (sourcing) raw materials

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 1

8. Outbound Logistics matches best with D. Delivery to the firm’s customer 9. Operations matches best with C. Assembly Line 4.

(Connect) Match the value chain activity in the left column with the scenario in the right column. 1. 2. 3. 4. 5. 6. 7. 8. 9.

Customer Call Center matches best with G. Service Activities Supply Schedules matches best with B. Inbound Logistics Order Taking matches best with I. Marketing and sales activities Accounting Department matches best with D. Firm Infrastructure Staff Training matches best with E. Human Resource Management Research and Development matches best with F. Technology Verifying quality of raw materials matches best with C. Procurement Distribution Center matches best with H. Outbound Logistics Manufacturing matches best with A. Operations

In 2002, John Deere’s $4 billion commercial and consumer equipment division implemented supply chain management software and reduced its inventory by $500 million. As sales continued to grow, they have been able to keep their inventory growth flat. How did the supply chain management software implementation allow them to reduce inventory on hand? How did this allow them to save money? Which income statement accounts (e.g., revenue, cost of goods sold, SG&A expenses, interest expense, etc.) would this affect? The use of supply chain software allowed the business to reduce its inventory and then as sales growth continued, keep its inventory growth flat. This is at least $500 million less that the company had to finance with either liabilities or equity. To the extent it reduced its debt, this would reduce its interest expense. The reduction in inventory also reduced the warehouses to store the inventory, potentially reducing SG&A expenses.

Dell Computer used Customer Relationship Management Software called IdeaStorm to collect customer feedback. This customer feedback led the company to build select consumer notebooks and desktops pre-installed with the Linux platform. Dell also decided to continue offering Windows 7 as a pre-installed operating system option in response to customer requests. Where does this fit in the value chain? How will this help Dell create value? By listening to the customer and meeting their needs, will this increase revenues or decreases expenses? The use of IdeaStorm at Dell helped Dell get to know its customers and their needs. The primary activity in the value chain that directly addresses the use of CRM is marketing and sales activities, which identifies the needs and wants of their customers to help attract them to the firm’s products and buy them. Using customer feedback to get to know their customers helps Dell get the right product at the right price to the right customer. It will potentially increase revenues and potentially reduce obsolete inventory by having the products that the customers need.

(Connect) Ingersoll Rand operates as a manufacturer in four segments: Air Conditioning Systems and Services, Climate Control Technologies, Industrial Technologies, and Security Technologies. ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 1

They installed an Oracle enterprise system, a supply chain system and a customer relationship management system. They boast the following results: • • • • • •

Decreased direct product costs by 11% Increased labor productivity by 16% Increased inventory turns by four times Decreased order processing time by 90% and decreased implementation time by 40% Ensured minimal business disruption Streamlined three customer centers to one

Please take each of these results and explain which of these systems most directly affected those results. 1. Decreased direct product costs by 11% - this likely came about by efficiencies gained by the supply chain system. 2. Increased labor productivity by 16% - this likely came about by efficiencies gained by the supply chain system. 3. Increased inventory turns by four times - this likely came about by efficiencies gained by a combination of the supply chain system and customer relationship management (by having the right product to the right customer) 4. Decreased order processing time by 90% and decreased implementation time by 40% (this was likely caused by a combination of the implementation of supply chain management, customer relationship management and enterprise systems). 5. Ensured minimal business disruption - uncertain how this is tied to the implementation of supply chain management, customer relationship management and enterprise systems 6. Streamlined three customer centers to one - uncertain how this is tied to the implementation of supply chain management, customer relationship management and enterprise systems

(Connect) Using the explanations of each IT strategic role below, suggest the appropriate IT strategic role (automate, informate or transform) for the following types of IT investments. Depending on your interpretation, it is possible that some of the IT investments could include two IT strategic roles. a. b. c. d. e. f. g. h. i.

Digital Health Records - automate Google Maps that recommend hotel and restaurants along a trip path - transform Customer Relationship Management Software - informate Supply Chain Management Software - informate Enterprise Systems - automate Airlines Flight Reservations Systems - informate PayPal - transform Amazon.com Product Recommendation on your homepage - transform eBay – informate or transform

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 1

Course and Teacher Evaluation conducted online for the first time (instead of on paper) – automate k. Payroll Produced by Computer - automate

(Connect) Information systems have impact on financial results. Using Figure 1-8 as a guide, which system is most likely to impact the following line items on an income statement. The systems to consider are enterprise systems, supply chain systems and customer relationship management systems. 1. Revenues 2. Cost of Goods Sold 3. Sales, General and Administrative Expenses 4. Interest Expense 5. Net Income Income Statement Item

System Customer relationship management system Supply chain system Enterprise system Supply chain system All of these

Revenues Cost of Goods Sold Sales, General and Administrative Expenses Interest Expense Net Income

10. (Connect) Accountants have four potential roles in accounting information systems: user,

manager, designer and evaluator. Match the specific accounting role to the activity performed. 1. Controller meeting with the systems analyst to ensure accounting information system is able to accurately capture information to meet regulatory requirements -- Designer 2. Cost accountant gathering data for factory overhead allocations from the accounting information system -- User 3. IT auditor testing the system to assess the internal controls of the accounting information system -- Evaluator 4. CFO plans staffing to effectively direct and lead accounting information system – Manager 11. (Connect) In 2013, Frey and Osborne wrote a compelling article suggesting that up to 47

percent of total US employment is at risk due to computerization. The chart below suggests the probability that each occupation will lead to job losses in the next 20 years. Selected Occupation Physician and Surgeon Preschool Teachers

Probability of Job Loss 0.004 0.007

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 1

Chemical Engineers Police Commercial Drivers Plumbers Economists Sheet Metal Workers Retail Salespersons Accountants and Auditors Tax Preparers

0.02 0.10 0.18 0.35 0.43 0.82 0.92 0.94 0.99

Given these predictions, which jobs are most likely to be replaced by computerization? Those that primarily have tasks that automate, informate or transform? -- Automate

Noticing the high probability of predicted job loss in the accounting and auditing area, are those job losses expected to be due to automate, informate or transform? -- Automate

As accountants become business partners in giving critical information to management for decision making, are those tasks automate, informate or transform? -- Informate

Is the use of data analytics by accountants, an example of automate, informate or transform? -- Informate

Source: "The Future of Employment: How Susceptible Are Jobs to Computerisation" by. C. Frey and M. Osborne (September 2013)

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 2

Chapter 2: Accountants as Business Analysts Multiple Choice Questions 1. e 2. d 3. e 4. e 5. e 6. b 7. d 8. e 9. e 10. c 11. c 12. e 13. d 14. c 15. b 16. a 17. b 18. e 19. d 20. a 21. e 22. e

Discussion Questions 1. The answers will vary according to the student’s background, but it is likely that they will feel best prepared to use technology and less prepared to design, manage, and evaluate technology. 2. Managing regulatory compliance would involve collection and maintenance of a wide variety of information. First, organizations would have to collect requirement information. Then, they would have collect process information to identify where process activities must comply with regulations. Finally, they would have ongoing collection of process performance data to ensure continued compliance and reporting. 3. BPMN activity diagrams support process documentation, process evaluation, and process improvement. Thus, BPMN diagrams would document the finance and accounting processes to support employee training. An accurate documentation would support an evaluation of process inefficiencies and potential process improvements including applications of technology, as well as a review of internal controls over the process and identification of potential weaknesses.

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 2

4. Student responses will vary depending on their experience, but most will mention training, SOX compliance, regulatory compliance, identifying and collecting process performance information, aiding audits, and so on. 5. Process modeling is iterative. The analyst will model the process and then confirm his/her model with process participants. The confirmation process would likely raise questions about completeness. 6. The use of pools and lanes help establish responsibility. It would be hard to enforce responsibility where multiple departments are involved. Additionally, the assignment process helps define tasks/activities at an appropriate level of detail that allows the models to be used for training, process change, performance management, etc. 7. Exclusive gateways show distinct choices, such as when you select one option among multiple alternatives. Inclusive gateways allow selection of one or more options, such as ordering both an entrée and an appetizer or just an entrée. Parallel gateways take all possible options, such as when dining at a restaurant that charges one price for the meal that includes an appetizer, main course, beverage, and dessert. 8. When the process experiences a delay such as described, the best way to model that is through the use of an intermediate event, such as an intermediate message (catching) event. 9. Processes that start with a timer event could be time to prepare financial reports, time to pay taxes, time to attend class, etc. 10. BPMN diagrams serve similar purposes to flowcharts. The following table compares basic symbols and shows the similarities. The BPMN symbols have more capability to handle events and the Gateways are more flexible that the flowchart decision symbol. The extended list of symbols in the chapter shows that many flowchart symbols are closely tied to specific and outdated data processing methods, whereas the BPMN symbols are independent of the technology.

Element

BPMN Symbol

Flowchart Symbol

Events/ Start and End

Activities

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 2

Sequence Flows

Gateways/ Decisions

Annotations

Comparing BPMN to data flow diagrams shows that the models are very different. Data flow diagrams do not have start, end, or intermediate event symbols. They do, however, clearly show the flow of data in a process or processes, where the BPMN diagram more clearly shows the sequence of activities.

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

Chapter 3: Data Modeling Multiple Choice Questions 1. e 2. a 3. b 4. e 5. e 6. b 7. b 8. a 9. b 10. a 11. e 12. e 13. c 14. e 15. c 16. a 17. e 18. a 19. a 20. e 21. b 22. a

Discussion Questions 1. Although the foreign key could be posted in either table, it makes sense to post it in the cash receipt table. The multiplicities indicate that the cash receipt instance occurs after the corresponding sales instance. If you post the foreign key in the sale table, the field would be blank and then when entering cash receipt information, the database would need to update two tables (to update the foreign key in the sales table). If the foreign key (the sales primary key) is posted in the cash receipt table, that value is always available when the cash receipt information is added. 2. The multiplicities suggest the business sells items on account and collects payment in full. Each payment is for one sale. The multiplicities would change to 0..* next to the cash receipt class, indicating a minimum of 0 and a maximum of many payments for each sale. 3. Each student may take a minimum of 0 and a maximum of many courses. Each course may have been taken by a minimum of 0 and a maximum of many students. The tables would look something like: Students Courses

[Student ID (PK), Student Name, Student Address, Student email, …] [Course number (PK), Course Name, Course Description, …] ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

Student-Courses [Student ID + Course Number (PK), Date Student Took Course, Grade Student Earned, …] 4. The composition relationship would look like the model below. The descriptiveness is a matter of taste.

5. Similar circumstances with the same model include: a deck of cards and the individual cards, a bouquet and the individual flowers (although this is an aggregation relationship example), a university and individual colleges, a high-rise building and the floors, etc. 6. There were undoubtedly a number of rules in the process: the student must pay tuition before enrollment; the student must have taken prerequisite courses before enrolling; the student must be admitted to the University before enrolling; the student cannot enroll outside of a specific date range; … 7. A typical checkout would show the items selected for purchase (in your cart), shipping costs, taxes, the customer’s name, address, phone number, and email for both billing and shipping, plus payment information (e.g., credit card or PayPal). Decision categories might include Calculation (what are the shipping costs for example); Fraud (is the credit card stolen); Targeting (what other products should we suggest to this customer). There would be rules about which fields had to be completed. There would be rules about valid forms of payment. There could be rules about valid shipping destinations. 8. Comparing the two figures, there are some obvious differences between the association lines and the relationship diamonds. The ERD names the relationship, providing additional information about the business purpose of the relationship. Less obvious is that the multiplicities/cardinalities are on the opposite side.

9. A simple class diagram for attending several universities is as follows: ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

(This assumes that Universities have at least one student and a student has attended at least one University.) 10. Examples of one-to-one relationships include: Cash sales at the supermarket (one cash receipt per sale) Sales of new cars (each sale includes one car and a new car is sold only once) Credit card sales over the internet (one sale and one cash receipt) Examples of one-to-many relationships include: Sale of a new car and the customer’s payments Customers and sales Employees and paychecks Houses and the cities they are located in (excluding mobile homes) Examples of many-to-many relationships include: Sales and inventory (at a grocery store) Payments over time on credit card sales (each payment may apply to several sales and each sale could result in several payments)

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

Problems (Note – Problems with “Connect” in parentheses below are available for assignment within Connect. The Connect-based solutions for all Problems can be found in the following section beginning on Page 6.) 1. (Connect) Dr. Franklin runs a small medical clinic specializing in family practice. The following simple diagram describes the basic relationships. It incorporates several assumptions: 1) a patient visit (sale) could take place without any diagnostic tests; 2) the tests/services are established in the database before they are used by Dr. Franklin; 3) patients are established in the database prior to the first patient visit (sale). Extensions to this model could include adding a second payer, such as an insurance company, as well as several options for payments (which are not shown in the diagram below).

2. (Connect) Paige ran a small frozen yogurt shop. She bought several flavors of frozen yogurt mix from her yogurt supplier. She bought plastic cups in several sizes from another supplier. She bought cones from a third supplier. She counts yogurt and cones as inventory, but she treats the cups as operating expense and doesn’t track any cup inventory. The simple diagram below describes Paige’s purchases. Normally, a purchase must involve at least one inventory item, but she expenses the cups upon purchase, so a cup purchase involves 0 inventory items whereas a yogurt or cone purchase involves at least one inventory item. This model also assumes that suppliers are recorded before items are purchased from them.

3. (Connect) A table structure to support problem 1 would look like: Patients Sales/Visits

[Patient ID (PK), Patient Name, Patient Address, …] [Patient Visit Number (PK), Date, Basic Fee, Other Charges, Total Amount Due, Patient ID (FK), ..] Tests/Services [Test/Service ID (PK), Test/Service Description, Charge for this Test/Service, …]

4. (Connect) A table structure to support problem 2 would look like: Suppliers [Supplier ID (PK), Supplier Name, Supplier Address, …] Purchases [Purchases Number (PK), Supplier ID (FK), Date, Amount, …] Inventory [Inventory ID (PK), Inventory Description, Quantity on Hand, ..] Purchase-Items [Purchases Number + Inventory ID (PK), Quantity Purchased, …] 5. (Connect) The following model shows the Multnomah County Library data model. Each county citizen may obtain a library card, so the association between Patrons and Issue Library Cards ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

indicates that constraint. Patrons can check out multiple books or DVDs. Patrons can use one computer at any time and reserve rooms. This assumes that the each room reservation involves one room.

6. (Connect) Sample tables for the Access database might look like these. Books and DVDs [Catalog# (PK), description, rental duration, …] Computers [Computer# (PK), computer type, date purchased, …] Rooms [Room # (PK), occupancy, location, …] Issue Library Cards [Issue# (PK), issue date, library card# (FK), …] Check Out Books/DVD [Transaction# ((PK), date, library card# (FK), …] Computer Use Session [Session# (PK), date/time started, date/time ended, Computer# (FK), library card# (FK),…] Room Reservations [Room Reservation # (PK), date, Room# (FK), library card# (FK), …]

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

Problems – Solutions for Connect Problem 1 1. How many classes did you include in your diagram? a. 2 b. 3 c. 4 d. 5 2. Which of the following best describes the names of the classes that you selected for your diagram? a. Diagnoses, clinic, Dr. Franklin b. Tests, Patient visits, Patients c. Bills, Patients, Appointments d. Dr. Franklin, patients, patient credit 3. Assume that the clinic maintains a lists of tests that it can provide to patients. That list might specify the nature of each test as well as the price to be charged for the test. The list is established before any patient visit. Which of the following best describes multiplicities that would appear next to the TESTS class in an association with a class for patient visits? a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * 4. Assume that the clinic tracks each patient visit separately along with all the tests performed during that visit. Consider an association between the TESTS class and a PATIENT VISIT class. Which of the following best describes multiplicities that would appear next to the PATIENT VISIT class? a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * 5. Assume that Dr. Franklin records information on her patients during the first patient visit. Consider an association between the PATIENTS class and the PATIENT VISITS class. Which of the following best describes multiplicities next to the PATIENT VISIT class? a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * 6. Consider an association between the PATIENTS class and the PATIENT VISITS class. Which of the following best describes multiplicities next to the PATIENT class? a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * 7. Which of the following best explains the reason why your diagram does not need a class to identify Dr. Franklin? ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

a. Dr. Franklin owns the clinic b. There is only one Dr. Franklin c. All patient visits are performed by Dr. Franklin d. Some tests may not be performed during one visit 8. Now consider the possibility that each patient may have one insurance provider. So, your model includes an INSURANCE class. Which of the following best describes the association between that class and other classes on your diagram? a. Associated with PATIENTS b. Associated with PATIENT VISITS c. Associated with TESTS d. Both a and b e. Both b and c Problem 2 1. How many classes did you include in your diagram? a. 2 b. 3 c. 4 d. 5 2. Which of the following best describes the names of the classes that you selected for your diagram? a. Paige, Yogurt Shop, Supplier b. Yogurt, Cones, Supplier c. Plastic cups, Paige, Cones d. Inventory, Purchases, Suppliers 3. If there is an association between a SUPPLIERS class and a PURCHASES class, which of the following best describes the multiplicities next to the PURCHASES class? Assume that SUPPLIERS are added to the database before the first purchase. a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * e. There is no association between SUPPLIERS and PURCHASES in the model 4. If there is an association between a SUPPLIERS class and a PURCHASES class, which of the following best describes the multiplicities next to the SUPPLIERS class? Assume that SUPPLIERS are added to the database before the first purchase. a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * e. There is no association between SUPPLIERS and PURCHASES in the model 5. If there is an association between an INVENTORY class and a PURCHASES class, which of the following best describes the multiplicities next to the PURCHASES class? Assume that INVENTORY records are added to the database before the first purchase. a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

d. Minimum 1, Maximum * e. There is no association between INVENTORY and PURCHASES in the model 6. If there is an association between an INVENTORY class and a PURCHASES class, which of the following best describes the multiplicities next to the INVENTORY class? Assume that INVENTORY records are added to the database before the first purchase. a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * e. There is no association between INVENTORY and PURCHASES in the model 7. If there is an association between a PAIGE class and a SUPPLIERS class, which of the following best describes the multiplicities next to the PAIGE class? Assume that SUPPLIERS records are added to the database before the first purchase. a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * e. There is no association between PAIGE and SUPPLIERS in the model 8. Assume that Paige’s yogurt business expanded and Paige hired several employees to purchase inventory from suppliers. What class(es) and association(s) would you add to the diagram to track this information? a. An EMPLOYEES class and an association between EMPLOYEES and PURCHASES. b. An EMPLOYEES class and an association between EMPLOYEES and SUPPLIERS. c. An EMPLOYEES class and an association between EMPLOYEES and INVENTORY. d. An EMPLOYEES class and an association between EMPLOYEES and PAIGE. e. None of these is a correct addition to the diagram. Problem 3 (relates to Problem 1) 1. How many relational tables are necessary to implement your model for Dr. Franklin’s clinic? a. 2 b. 3 c. 4 d. 5 2. Which of the following is the best primary key for the TESTS table? a. Test number b. Test description c. Test price d. Test date 3. Which of the following is the best way to implement the association between TESTS and PATIENT VISITS tables? a. Post the primary key of PATIENT VISITS in TESTS as a foreign key. b. Post the primary key of TESTS in PATIENT VISITS as a foreign key. c. Create a linking table between TESTS and PATIENT VISITS with a primary key that combines the primary keys of TESTS and PATIENT VISITS d. Create a new table that includes the primary keys of TESTS and PATIENT VISITS as foreign keys e. None of these is the best option. ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

4. Which of the following is the best option for the PATIENTS table primary key? a. Patient phone number b. Patient number (assigned by clinic) c. Patient name d. Patient birthdate e. None of these is a good option 5. Which of the following is the best option for the PATIENT VISITS table primary key? a. Patient number b. Visit date c. Visit number (assigned by clinic) d. Visit description e. None of these is a good option 6. Which of the following is the best way to implement the association between PATIENTS and PATIENT VISITS tables? a. Post the primary key of PATIENT VISITS in PATIENTS as a foreign key. b. Post the primary key of PATIENTS in PATIENT VISITS as a foreign key. c. Create a linking table between PATIENTS and PATIENT VISITS with a primary key that combines the primary keys of PATIENTS and PATIENT VISITS d. Create a new table that includes the primary keys of PATIENTS and PATIENT VISITS as foreign keys e. None of these is the best option. Problem 4 (relates to Problem 2) 1. How many relational tables are necessary to implement your model for Paige’s yogurt shop? a. 2 b. 3 c. 4 d. 5 2. Which of the following is the best primary key for the INVENTORY table? a. Inventory number b. Inventory description c. Inventory price d. Inventory quantity 3. Which of the following is the best way to implement the association between INVENTORY and PURCHASES tables? a. Post the primary key of PURCHASES in INVENTORY as a foreign key. b. Post the primary key of INVENTORY in PURCHASES as a foreign key. c. Create a linking table between INVENTORY and PURCHASES with a primary key that combines the primary keys of INVENTORY and PURCHASES d. Create a new table that includes the primary keys of INVENTORY and PURCHASES as foreign keys e. None of these is the best option. 4. Which of the following is the best option for the SUPPLIERS table primary key? a. Supplier phone number b. Supplier number (assigned by yogurt shop) c. Supplier name d. Supplier contact person ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

e. None of these is a good option 5. Which of the following is the best option for the PURCHASES table primary key? a. Purchase quantity b. Purchase date c. Purchase number (assigned by yogurt shop) d. Purchase description e. None of these is a good option 6. Which of the following is the best way to implement the association between SUPPLIERS and PURCHASES tables? a. Post the primary key of PURCHASES in SUPPLIERS as a foreign key. b. Post the primary key of SUPPLIERS in PURCHASES as a foreign key. c. Create a linking table between SUPPLIERS and PURCHASES with a primary key that combines the primary keys of SUPPLIERS and PURCHASES d. Create a new table that includes the primary keys of SUPPLIERS and PURCHASES as foreign keys e. None of these is the best option. Problem 5

1. Which of the following is the best name for the class designated as A in the diagram? a. Books b. Computers c. Patrons d. Room Reservations e. Computer Use Sessions 2. Which of the following is the best name for the class designated as B in the diagram? ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

a. Books b. Computers c. Patrons d. Room Reservations e. Computer Use Sessions 3. Which of the following is the best name for the class designated as C in the diagram? a. Check Out Books and DVDs b. Computers c. Patrons d. Room Reservations e. Computer Use Sessions 4. Which of the following is the best name for the class designated as D in the diagram? a. Books b. Computers c. Patrons d. Room Reservations e. Computer Use Sessions 5. Which of the following is the best name for the class designated as E in the diagram? a. Books b. Computers c. Patrons d. Room Reservations e. Computer Use Sessions 6. Which of the following is the best option for multiplicities to replace F in the diagram? a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * 7. Which of the following is the best option for multiplicities to replace G in the diagram? a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * 8. Which of the following is the best option for multiplicities to replace H in the diagram? a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * 9. Which of the following is the best option for multiplicities to replace I in the diagram? a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * 10. Which of the following is the best option for multiplicities to replace J in the diagram? a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

Problem 6 (relates to Problem 5) Part 1

a. b. c. d. e. f. g. h.

Tables

Primary Keys

Rooms Room Reservations Patrons Check Out Books/DVDs Computers Issue Library Cards Computer Use Sessions Books and DVDs

__________ __________ __________ __________ __________ __________ __________ __________

2 5 6 9 3 10 11 1

Possible primary keys (# indicates number) 1. Book/DVD Catalog # 2. Room # 3. Computer # 4. Card # 5. Room Reservation # 6. Patron # 7. Employee # 8. Library # 9. Check Out Transaction # 10. Card Issue # 11. Computer Use Session # 12. Library Card Category # 13. County # 14. Patron Phone # Part 2

a. b. c. d. e. f. g. h.

Tables

Foreign Keys

Rooms Room Reservations Patrons Check Out Books/DVDs Computers Issue Library Cards Computer Use Sessions Books and DVDs

__________ __________ __________ __________ __________ __________ __________ __________

Possible primary keys (# indicates number) ..

15 2, 6 15 6 15 6 3, 6 15

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

1. Book/DVD Catalog # 2. Room # 3. Computer # 4. Card # 5. Room Reservation # 6. Patron # 7. Employee # 8. Library # 9. Check Out Transaction # 10. Card Issue # 11. Computer Use Session # 12. Library Card Category # 13. County # 14. Patron Phone # 15. No foreign key

Problem 7 (Available in Connect Only) Use the following narrative to complete the UML class diagram with classes, associations, and multiplicities outlined below and then answer the associated questions: The Pacific Construction Company’s construction projects required careful planning. Each project has a budget. The budget is established within a few weeks after the project is authorized. A budget is composed of many budget items. Each budget item could include labor cost estimates, equipment cost estimates, service cost estimates, or materials cost estimates. Labor costs are estimated by identifying the types of employees that will work on each project, the labor rates for that type of employee, and the expected hours required. Equipment costs are similarly estimated by identifying the type of equipment, costs, and hours. Services costs are broadly estimated by type of service and expected total cost. Materials costs are estimated by type of material, quantity required, and expected cost. A budget item could combine multiple types of labor, equipment, or materials, but it would include only one type of service. A budget item would include only labor, or equipment, or services, or materials. Labor, equipment, services, and materials information is recorded before use to form budgets.

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

Part 1 1. Which of the following is the best name for the class designated as A in the diagram? a. Materials b. Projects c. Employees d. Supervisors e. None of these 2. Which of the following is the best name for the class designated as B in the diagram? a. Projects b. Project Locations c. Materials d. Project items e. Budget items 3. Which of the following is the best name for the class designated as C in the diagram? a. Materials b. Employees c. Labor rates d. Projects e. None of these 4. Which of the following is the best option for multiplicities to replace D in the diagram? a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * 5. Which of the following is the best option for multiplicities to replace E in the diagram? a. Minimum 0, Maximum 1 ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * 6. Which of the following is the best option for multiplicities to replace F in the diagram? a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * 7. Which of the following is the best option for multiplicities to replace G in the diagram? a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum * 8. Which of the following is the best option for multiplicities to replace H in the diagram? a. Minimum 0, Maximum 1 b. Minimum 0, Maximum * c. Minimum 1, Maximum 1 d. Minimum 1, Maximum *

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

Part 2 Match each of the following tables from the diagram with the number of the corresponding primary key from the list of primary keys below. Assign 0 to any tables that are not part of the database for this diagram. Possible primary keys (# indicates number) 1. Project # 2. Budget # 3. Budget item # 4. Employee # 5. Customer # 6. Labor category # 7. Equipment category # 8. Services category # 9. Materials type # 10. Budget item # + Labor category # 11. Budget item # + Equipment category # 12. Budget item # + Services category # 13. Budget item # + Materials type # 14. Budget # + Budget item #

a. b. c. d. e. f. g. h. i. j. k. l.

Tables

Primary Keys

Projects Budgets Budget items Labor Equipment Services Materials Budget items - Labor Customers Budget items – Materials Budget items – Services Budget items – Equipment

__________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________

1 2 3 6 7 8 9 10 0 13 0 11

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 3

Part 3 Match each of the following tables with the number of a primary key or keys from the list of primary keys below that would be posted in the table as a foreign key. Assign 0 to any tables that that do not have foreign keys. Table C has been completed as an example. Possible primary keys (# indicates number) 1. Project # 2. Budget # 3. Budget item # 4. Employee # 5. Customer # 6. Labor category # 7. Equipment category # 8. Services category # 9. Materials type # 10. Budget item # + Labor category # 11. Budget item # + Equipment category # 12. Budget item # + Services category # 13. Budget item # + Materials type # 14. Budget # + Budget item #

a. b. c. d. e. f. g.

Tables

Foreign Keys

Projects Budgets Budget items Labor Equipment Services Materials

__________ __________ __________ __________ __________ __________ __________

0 1 2, 8 0 0 0 0

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 4

Chapter 4 – Relational Databases and Enterprise Systems Multiple Choice Questions 1. B 2. A 3. C 4. B 5. B 6. A 7. D 8. A 9. C 10. B 11. D 12. C 13. B 14. A 15. A

Discussion Questions 1. Hierarchical data models organize data into a tree-like structure. In a hierarchical data model, data elements are related to each other using one-to-many relationships. A network data model is a flexible model representing objects and their relationships. It allows many-to-many relationships. The relational data model is a data model that stores information in the form of related two-dimensional tables. While hierarchical and network data models require relationships to be formed at the database creation, relational data models can be made up as needed. The relational database is the most popular data model in use today because it has the following advantages: flexibility and scalability simplicity reduced information redundancy.

2. The approach of relational database imposes requirements on the structure of tables: • • •

The Entity Integrity Rule: the primary key of a table must have data values (cannot be null). The Referential Integrity Rule: the data value for a foreign key must either be null or match one of the data values that already exist in the corresponding table. Each attribute in a table must have a unique name. ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 4

• • •

Values of a specific attribute must be of the same type. Each attribute (column) of a record (row) must be single-valued. This requirement forces us to create a relationship table for each many-to-many relationship. All other non-key attributes in a table must describe a characteristic of the class (table) identified by the primary key.

3. The information accountants needed is not always ready for use in the database. Accountants need to use SQL to pull data needed out from the master table, to design queries to get the calculated data and to run report in an application. Additionally, learning SQL helps accountants better communicate with IT support when they need assistance.

4. MM Materials Management: for the manufacturing companies, material management such as raw material purchase and usage, storage and condition check is always important because it affects the manufacturing process and cost of goods. --PP Production Planning and Control: Production Planning consists of all master data, system configuration, and transactions to complete the Plan in produce process. It related to the planning stage to the completion of manufacturing, it is critical to the whole process of manufacturing. SD Sales and Distribution: the Sales and Distribution consists of all master data, system configuration, and transactions to complete the Order to Cash process. It is the purpose of manufacturing.

5. The challenge of integrating with the firm’s own existing legacy systems best described Hershey’s failure of implementing of ERP. Before 1999, Hershey was running legacy systems. When it tried to implement ERP system in 1999, it chose to replace those systems. But the changes cause the delayed delivery of goods during holiday season and big loss in that year.

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 4

Problems (Note – Problems with “Connect” in parentheses below are available for assignment within Connect. Problems 17 and 18 are available in Connect only.) 1. (Connect) Account# BA-6 BA-7 BA-9

Balance 253 48,000 950

2. (Connect) Account# BA-9 BA-6

Balance 950 253

3. (Connect) Using the Cash Table below, show the SQL command which will return accounts with only checking type: Cash Account# BA-6 BA-7 BA-8 BA-9

Type Checking Checking Draft Checking

Bank Boston5 Shawmut Shawmut Boston5

Balance 253 48,000 75,000 950

Answer: SELECT * FROM Cash WHERE Type = “Checking”;

4. (Connect) Using the Cash Table below, show the SQL command which will return the sum of balance: Cash Account# BA-6 BA-7 BA-8 BA-9

Type Checking Checking Draft Checking

Bank Boston5 Shawmut Shawmut Boston5

Balance 253 48,000 75,000 950

Answer: SELECT SUM(Balance) FROM Cash;

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 4

6. (Connect) a. Customer table, sales table, cash receipt table are some examples. Students include a variety of tables containing subscriber data, such as movie ratings. b. Customer table could include the following attributes: customer#, customer name, customer email address, customer phone#, customer zip Sales table could include the following attributes: sales#, sales date, customer#, item#, employee# Cash receipt table could include the following attributes: cash receipt#, cash receipt amount, cash receipt date, customer#, sales# etc. c. The customer# may have information in the data dictionary such as data type: integer, validation: required. Customer name may have data type: text. Customer zip may have field length: Cash receipt amount has data type: currency. d. Netflix tries to trace its customer information to find out the features of their customer in order to improve its product and improve its customer service. The company is also interested in sales and cash receipts information to analyze its profitability and manage its cash flows.

7. People may be reluctant to cloud computing because they may concern about the secure issue about the sensitive data. Additionally, they also concern about the network stability because the system will not function if the network connection goes down. That may potentially cause big damage.

8. Access Practice using Access_Practice.accdb to complete the required tasks. ..

Richardson, Chang, Smith – Accounting Information Systems, 2nd Edition – Chapter 4

a. Link the tables 1) Open the access database (called Access_Practice.accdb), select “Enable Content” in the yellow SECURITY WARNING to work on the assignment. If you do not see the warning, proceed to step 2.

2) Select the “DATABASE TOOLS” tab. Select “Relationships” in the “Relationships” box to open the Show Table window. Holding down shift, select “Inventory,” “Sales,” and “SalesItems” from the Tables list. Select Add then Close.

The following screen will show up:

3) Link the tables by dragging the primary key to its foreign key in the appropriate table. For each link place a check in the Enforce Referential Integrity box. Select Create.