Accounting Information System Answer 1-3

Q1.7    Apply the value chain concept to S&S. Explain how it would perform the various primary and support activities. The value chain classifies business activities into two categories: primary and support.  The five primary activities at S&S: a. Inbound logistics includes all processes involved in ordering, receiving, and temporarily storing merchandise that is going to be sold to S&S customers.  b. S&S does not manufacture any goods, thus its operations activities consists of displaying merchandise for sale and protecting it from theft.  c. Outbound logistics includes delivering the products to the customer.  d. Sales & marketing includes ringing up and processing all sales transactions and advertising products to increase sales.  e. Service includes repairs, periodic maintenance, and all other post-sales services offered to customers. The four support activities at S&S: a. Firm infrastructure includes the accounting, finance, legal, and general administration functions required to start and maintain a business.  b. Human resource management includes recruiting, hiring, training, evaluating, compensating, and dismissing employees.  c. Technology includes all investments in computer technology and various input/output devices, such as point-of-sale scanners.  It also includes all support activities for the technology. d. Purchasing includes all processes involved in identifying and selecting vendors to supply goods and negotiating the best prices, terms, and support from those suppliers. P1.4    Match the description in the right column with the information characteristic in the left column.  F 1. Relevant a. The report was carefully designed so that the data contained on the report became information to the reader E, C 2. Reliable b. The manager was working one weekend and needed to find some information about production requests for a certain customer. He was able to find the report on the company’s network. D 3. Complete c. The data on a report was checked by two clerks working independently G 4. Timely d. An accounts receivable aging report that included all customer accounts A 5. Understandable e. A report checked by 3 different people for accuracy C 6. Verifiable f. An accounts receivable aging report used in credit granting decisions B 7. Accessible g. An accounts receivable aging report was received before the credit manager had to make a decision whether to extend customer credit     P1.8    Classify each of the following items as belonging in the revenue, expenditure, human resources/payroll, production, or financing cycle. a. Purchase raw materials                – Expenditure cycle b. Pay off mortgage on factory            – Financing cycle c. Hire a new assistant controller            – Human resources/payroll cycle d. Establish a $10,000 credit limit for a new customer – Revenue cycle e. Pay for raw materials                 – Expenditure cycle f. Disburse payroll checks to factory workers     - Human resources/payroll cycle g. Record goods received from vendor        – Expenditure cycle h. Update the allowance for uncollectible accounts     – Revenue cycle i. Decide how many units to make next month    – Production cycle j. Complete picking ticket for customer order    – Revenue cycle k. Record factory employee timecards         - Human resources/payroll cycle l. Sell concert tickets                     – Revenue cycle m. Draw on line-of-credit                 – Financing cycle n. Send new employees to a business ethics course     - Human resources/payroll cycle o. Pay utility bills                     – Expenditure cycle p. Pay property taxes on office building         – Expenditure cycle q. Pay federal payroll taxes                - Human resources/payroll cycle r. Sell DVD player                     – Revenue cycle s. Collect payment on customer accounts        – Revenue cycle t. Obtain a bank loan                     – Financing cycle u. Pay sales commissions                 - Human resources/payroll cycle v. Send an order to a vendor                 – Expenditure cycle w. Put purchased goods into the warehouse         – Expenditure cycle P2.1    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 2-2. Some of the changes in the chart of accounts for each type of entity include the following: b.      Bank l Loans to customers would be an asset, some current others noncurrent, depending upon the length of the loan. l No inventory l Customer accounts would be liabilities. l Classification of revenue would be among loans, investments, service charges, etc. l No cost of goods sold. d.    Manufacturing Company l Several types of inventory accounts (raw materials, work-in-process, and finished goods). l Additional digits to code revenues and expenses by products and to code assets/liabilities by divisions. e.    Expansion of S&S l Additional digits to code: l Revenues and expenses by products and by stores l Assets/liabilities by stores. P2.5    Match the following terms with their definitions TERM DEFINITION _10_ a. data processing 1. Contains summary-level data for every asset, liability, equity, revenue, and expense account _23_ b. source documents 2. Items are numbered consecutively to account for all items; missing items cause a gap in the numerical sequence _7_ c. turnaround documents 3. Path of a transaction through a data processing system from point of origin to final output, or backwards from final output to point of origin _16_ d. source data automation 4. List of general ledger account numbers; allows transaction data to be coded, classified, and entered into proper accounts; facilitates preparation of financial statements and reports _1_ e. general ledger 5. Contents of a specific field, such as “George” in a name field _13_ f. subsidiary ledger 6. Portion of a data record that contains the data value for a particular attribute, like a cell in a spreadsheet _26_ g. control account 7. Company data sent to an external party and then returned to the system as input _21_ h. coding 8. Used to record infrequent or non-routine transactions _2__ i. sequence code 9. Characteristics of interest that need to be stored _25_ j. block code 10. The steps a company must follow to efficiently and effectively process data about its transactions _19_ k. group code 11. Something about which information is stored _22_ l. mnemonic code 12. Stores cumulative information about an organization; like a ledger in a manual AIS. __4_ m. chart of accounts 13. Contains detailed data for any general ledger account with many individual subaccounts __8_ n. general journal 14. Contains records of individual business transactions that occur during a specific time period _17_ o. specialized journal 15. Updating each transaction as it occurs __3_ p. audit trail 16. Devices that capture transaction data in machine-readable form at the time and place of their origin _11_ q. entity 17. Used to record large numbers of repetitive transactions __9_ r. attribute 18. Set of interrelated, centrally coordinated files __6_ s. field 19. Two or more subgroups of digits are used to code items _24_ t. record 20. Updating done periodically, such as daily __5_ u. data value 21. Systematic assignment of numbers or letters to items to classify and organize them _12_ v. master file 22. Letters and numbers, derived from the item description, are interspersed to identify items; usually easy to memorize _14_ w. transaction file 23. Initial record of a transaction that takes place; usually recorded on preprinted forms or formattted screens _18_ x. database 24. Fields containing data about entity attributes; like a row in a spreadsheet _20_ y. batch processing 25. Sets of numbers are reserved for specific categories of data _15_ z. online, real-time processing 26. The general ledger account corresponding to a subsidiary ledger, where the sum of all subsidiary ledger entries should equal the amount in the general ledger account     P2.6     For each of the following scenarios identify which data processing method (batch or online, real-time) would be the most appropriate.