Chapter One solutions:
1.1 Describe some inputs, processes and outputs of an accounting information system. (LO1,
LO2, LO3)
Inputs: Sales order (record purchase requests from customers), purchase data (data about
purchases initiated with our vendors), Receiving data (data about arriving goods), shipping data
(data about goods sent to customers), invoices (received from vendors)
Processes: Check data is valid, sort data, manipulate data
Outputs: Invoice (sent to customer), cheque (sent to vendor), profit and loss report, accounts
receivable report
1.6 What are some of the uses of accounting information? Provide five examples of how
accounting information may be used and who it would be used by. (LO5)
The table below provides some typical examples of how accounting information may be used.
USER USES OF ACCOUNTING INFORMATION
Shareholder Uses the general purpose financial reports to assess the performance of the
company they have invested in, assessing both historical performance and
using the historical information to make predictions about future
performance.
Managers Are commonly exposed to bonus schemes that are based on profit levels or
other financial performance indicators. Thus managers have accounting
information being used as a performance assessment device.
Union May use financial reports of companies – particularly profit information – to
substantiate claims for higher wages for union members.
Bank Will look at financial performance and financial position information when
assessing credit worthiness of loan applicants.
Suppliers A company’s suppliers may wish to view financial information before
entering in to long term supply agreements, in order to ensure that the
company is able to meet the terms of the agreement and pay for the
supplies that are purchased.
