Accounts Receivable and Information

6187 WordsOct 23, 201225 Pages
chapter 1 accounting information systems: An overview Suggested Answers to Discussion Questions 1.1 The value of information is the difference between the benefits realized from using that information and the costs of producing it. Would you, or any organization, ever produce information if its expected costs exceeded its benefits? If so, provide some examples. If not, why not? Most organizations produce information only if its value exceeds its cost. However, there are two situations where information may be produced even if its cost exceeds its value. a. It is often difficult to estimate accurately the value of information and the cost of producing it. Therefore, organizations may produce information that they expect…show more content…
While this active learning activity takes more time than a lecture does, it drives the point home much better than a lecture would. It also keeps the students more engaged in the material. 1.4 How do an organization’s business processes and lines of business affect the design of its AIS? Give several examples of how differences among organizations are reflected in their AIS. An organization’s AIS must reflect its business processes and its line of business. For example: * Manufacturing companies will need a set of procedures and documents for the production cycle; non-manufacturing companies do not. * Government agencies need procedures to track separately all inflows and outflows from various funds, to ensure that legal requirements about the use of specific funds are followed. * Financial institutions do not need extensive inventory control systems. * Passenger service companies (e.g., airlines, bus, and trains) generally receive payments in advance of providing services. Therefore, extensive billing and accounts receivable procedures are not needed; instead, they must develop procedures to account for prepaid revenue. * Construction firms typically receive payments at regular intervals, based on the percentage of work completed. Thus, their revenue cycles must be designed to track carefully all work performed and the

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