Discuss some of the challenges facing business today.

Discuss some of the challenges facing business today.

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Discussion Questions 1. Discuss some of the challenges facing business today. Does information

technology play a role in these challenges? Explain. 2. Giving examples, discuss how information technology is revolutionizing the

accounting function and what accountants do. Contrast accounting tasks before and after the “information technology revolution.”

3. What is the role of the accounting professional in the database approach to satisfying business information needs? Be specific.

4. Explain the purpose of accounting. Distinguish between the purpose of accounting and the traditional methodology used in accounting.

5. Who are the “information customers” served by accounting. Provide examples. 6. Describe the traditional view of accounting and the manual accounting process. 7. What are the problems associated with the traditional view of accounting? 8. Distinguish between “transactions orientation” and “events orientation.” 9. Accounting has been criticized for adopting a narrow view focusing only on the

financial aspects of transactions. Giving examples, explain how accounting can move beyond purely financial measurement of transactions.

10. Distinguish between periodic and real-time reporting. From an accounting standpoint, does real-time reporting present any problems? Explain.

11. Explain why the accessibility of data in a manual accounting system is limited. 12. Traditional manual accounting systems are often criticized because accounting

data are stored in too aggregate a form and because of the limited flexibility in answering cross functional queries. Are these criticisms valid? Explain why or why not.

13. The two unique aspects of the database approach to accounting are (1) events orientation and (2) enterprise-wide repository. Explain each of these two aspects of the database approach.

14. What are the advantages of the database approach to accounting in contrast with traditional manual accounting?

15. Briefly explain the various roles that future accounting professionals can play.

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Problems and Exercises 1. ACME Supplies is a retail store specializing in hardware and building supplies. Merchandise is purchased from vendors on account. Vendor representatives visit the store and solicit orders from the store manager. Often, the store manager does not place an order because she feels that the prices on items being offered by the representative are likely to go down. The store has eight employees, four of which are salespersons. Salespersons assist customers in finding merchandise and answer any questions that they might have. There is high turnover among the salespersons, and it is not uncommon for one or more salespersons to call in sick or simply fail to appear for work. Occasionally, customers leave the store unable to find what they are looking for. Merchandise is sold to customers on a cash basis and also on credit to selected customers (mainly large local builders). The store is located in a leased building. Apart from lease payments, other expenses include utilities, maintenance expenses, office supplies, and payroll. The store also has a bank loan to finance its working capital requirements.

• a) Assuming that ACME Supplies has a manual accounting system, list the various accounting cycles that you might expect to find for the store.

• b) List revenue and expense items and indicate in which cycle each item would be accounted for.

• c) Assuming that financial reports are prepared monthly, list the month-end procedures which would have to be undertaken to generate the reports.

• d) Generate questions that the store manager might have that would be difficult to answer given a traditional manual accounting system.

• e) Identify some events which are relevant for the store but which would not be captured and reflected in a traditional manual accounting system.

2. Bubba Howdee is an aspiring accounting major at Northwest Montana Tech. He has heard from friends that accounting is a good major because most accounting students get jobs upon graduation. Bubba likes working with numbers and got an A in “Principles of Accounting” where he had no trouble with debits and credits. However, he describes himself as being “computer illiterate” and did not particularly like the “Introduction to Information Systems” class. Bubba seeks your advice regarding whether he should pursue a future in accounting.

• a) What advice would you have for Bubba? • b) Describe the various types of jobs that an accounting major can get and

indicate the kinds of computer skills that might be required for each job. • c) Compare and contrast accounting procedures as they would occur in a

traditional manual accounting system relative to a database-oriented system. • d) Given your own background and training thus far, indicate how well prepared

you feel to take on a role as the information provider in an organization, possibly competing with MIS professionals.

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3. Visit the Web sites of each of the “Big Four” CPA firms. For each firm, construct a brief list of services provided by each of their various divisions. Indicate your assessment of the extent of (1) accounting skills and (2) information technology skills required for a professional in the firm to provide those services.

4. Visit the Web sites of the major ERP system vendors: SAP ERP, Oracle Applications, NetSuite, Microsoft Dynamics. Within each web site, locate information provided about “success stories” of customers using that vendor’s enterprise software. Such information may be located under a “customer profiles” section or a “customer successes” section of the ERP vendor’s web site. Gather enough information for classroom discussion. If so directed by your instructor, write a brief summary of one such “success story” for any one of the ERP vendors.

5. In a conversation with a recruiter from one of the “Big Four” accounting firms, he mentioned that a number of staff that do information systems audits in his office have a certification called the CISA. The recruiter proceeded to tell you what he knew about this certification but really wasn’t up to speed on the exact requirements for earning this certification. You thought this certification might be something you would be interested in. Visit the Information Systems Control and Audit Association web site (at www.isaca.org) and prepare a brief report on the requirements for this certification.

Last Updated: August 16, 2013

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Organizations and the role accounting
Information Customers
Accounting: The Traditional View
The manual accounting process
Problems with the traditional view of accounting
Transactions orientation
Narrow view—financial data only
Periodic, not real-time
Limited accessibility
Too high a level of aggregation
Limited flexibility
Computerized Bookkeeping: No Panacea
The New View: A Database Approach
Roles That Future Accounting Professionals Can Play
Overview of the book
Key Web Sites
International Accounting Firms
Consulting Firms
Key Computer and Software Related Firms
Major Enterprise Resource Planning (ERP) Systems Vendors
Major Database Systems Vendors
Discussion Questions
Problems and Exercises

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