1. Discuss some of the challenges facing business today. Does information technology play a role in these challenges? Explain.
The business world and society in general are undergoing phenomenal and sometimes turbulent change. The “new economy” driven by the Internet has seen the rise of entirely new businesses like Amazon.com, Yahoo, eBay, and of course Google. While the “dot com bust” of 2000 saw the demise of thousands of Internet-oriented businesses, the fact remains that most traditional “bricks and mortar” businesses have been forced to transform themselves into some form of an “e-business” simply to survive in this new era. The old cliché, that the only constant in business is change, is still true except that changes occur at “Internet speed.” Information technology is at the core of these radical Internet-driven changes. What implications does the “new economy” have for accounting? Whether in an “old economy” business or a “new economy” business, accounting information is intrinsic in most business processes. All businesses must still capture, process, store, and report accounting and other information about business processes to assess performance.
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.”
Organizational leaders and managers need information about its value adding activities as a basis for determining whether the organization is achieving its goals. Given that even non-profit organizations incur costs, an essential aspect of running an organization and ensuring its long term survival involves recording, tracking, and reporting information about both value adding activities and cost incurring activities. As you undoubtedly have guessed, this information about organizational value adding and cost incurring activities is the domain of the accounting function in the organization. In business organizations, the role of accounting has always been to provide information useful for decision making. In business organizations, the information provided by the accounting function is typically used to make economic decisions as they relate to the “value adding” activities for the organization. Accounting takes business transactions as data inputs and ultimately generates a variety of financial reports as information outputs.
3. What is the role of the accounting professional in the database approach to satisfying business information needs? Be specific.
In business organizations, the role of accounting has always been to provide information useful for decision making. In business organizations, the information provided by the accounting function is typically used to make economic decisions as they relate to the “value adding” activities for the organization. Information about sales revenues, purchases of materials, wages and salaries paid to employees are all examples of accounting information useful for making economic decisions about what to buy and sell, etc.
4. Explain the purpose of accounting. Distinguish between the purpose of accounting and the traditional methodology used in accounting. the purpose of accounting is to provide information for economic decision making. Economic activity in an organization manifests itself in a variety of events traditionally referred to as transactions. For long, the role of accounting has been to record, classify, and report the results of these transactions. The traditional methodology for recording and classifying transactions is the double-entry system of bookkeeping devised by Luca Pacioli in 1494.
5. Who are the “information customers” served by accounting. Provide examples. Information customers are either internal or external. Internal information customers, within the organization, would include employees at all levels from top management to the lowest level worker who has a...