2. Chapter 12 Accounting on the Internet
Introduction
The Internet and the World Wide Web
XBRL – Financial Reporting on the Internet
Electronic Commerce
Privacy and Security on the Internet

3. The Internet and World Wide Web
The Internet is a collection of local and wide-area networks that are now connection together via the Internet backbone.
An Internet service provider (ISP) maintains its own Internet computers.

4. Internet Addresses and Software
To transmit data over the Internet, a computer uses an Internet address and a forwarding system.
The Internet address begins as a domain address, which is also called a universal resource locator (URL).
Internet computers translate text-based domain addresses into numeric Internet protocol (IP) addresses such as

5. Intranets and Extranets
Intranets are internal company networks that use the same software as the Internet.
Some businesses create Extranets that enable selected outside users to access their Intranets.

6. The World Wide Web
The multimedia portion of the Internet is called the World Wide Web or just “the web.”
A web browser enables users to view the graphics files of the Internet.
Web pages are created in an editing language such as hypertext markup language (HTML).

7. The World Wide Web
The Internet transfers web pages from one computer to another using a communications protocol such as hypertext transfer protocol (http).
A home page is the first page a user sees when he or she supplies a web browser with a domain address.
Home pages act as a table of contents with hyperlinks to other web pages.

8. Groupware, Electronic Conferencing, and Blogs
Groupware allows users to send and receive , plus perform a wide range of other document-editing tasks.
Groupware allow users to collaborate on work tasks, make revisions to the same document, schedule appointments on each other’s calendars, share files and databases, conduct electronic meetings, and develop custom applications.

9. Groupware, Electronic Conferencing, and Blogs
Instant Messaging Software enables remote users to communicate with each other via the internet.
Electronic Conferencing enables several users to join a discussion instead of just two.

10. Groupware, Electronic Conferencing, and Blogs
Electronic mail enables individuals or companies to communicate with other Internet users around world.

11. Groupware, Electronic Conferencing, and Blogs
Blogs or web logs allows users with Web browsers and easy-to-use software to publish a personalized diary online. Blogging introduces a new way to create, share, and leverage knowledge in an organization.

12. XBRL – Financial Reporting on the Internet
The primary repository of financial information on the Internet is the Security and Exchange Commission’s Electronic Data Gathering and Retrieval Database (EDGAR).
EDGAR contains the financial report filings of U.S. publicly held companies in plaintext format.
PricewaterhouseCoopers developed EdgarScan to take the information in EDGAR and change it to a common format.

13. XBRL – Financial Reporting on the Internet
EdgarScan’s common format allows users to extract data from multiple companies and compare it.
However, such comparisons are limited to formal financial report filings for a limited set of enterprises.
The eXtensible Business Reporting Language (XBRL) is a specialized software language for the financial reporting industry.

14. XBRL – Financial Reporting on the Internet
XBRL is a subset of eXtensible Markup Language (XML).
XML is similar to HTML and yet different because:
Its tags are extensible
The tags describe the data rather than just indicating their display
XBRL is a global effort by the XBRL Steering Committee (

15. XBRL – Financial Reporting on the Internet
XBRL’s many benefits include:
Single-format filing
Ease of corporate comparisons

16. How Does XBRL Affect Accountants? - Slide 1
Provides greater transparency
Permits automatic and reliable exchange of financial information across different formats and technologies
Does not require a change to existing accounting standards or disclosure requirements
Eliminates the need to re-enter financial data for different users

17. How Does XBRL Affect Accountants? - Slide 2
Lowers the cost of the preparation and distribution of financial statements
Improves investor- and analyst- access to information
Allows accountants to consolidate and scrutinize internal data for financial reporting purposes
Allows CEOs and CFOs to deliver more transparent information

18. Electronic Commerce
Electronic Commerce (EC) refers to conducting business with computers and data communications.
EC can be performed over the Internet or using proprietary lines.
General categories of EC include retail sales, E-payments and E-wallets, and electronic data interchange.

19. Retail Sales Advantages of Virtual Stores – Slide 1
Web pages are much cheaper than creating and mailing catalogs;
Distribution is global;
Sales can occur around the clock;
Customers can search for specific products or services electronically, either within a particular web site or as a “hit” from another site;

20. Retail Sales Advantages of Virtual Stores – Slide 2
Businesses can easily outsource its web business to others, enabling it to focus on core processes;
The web sites themselves can use automated tools to verify customer credit cards;
Businesses can send s to confirm orders or advise customers about shipping dates;

21. Retail Sales Advantages of Virtual Stores – Slide 3
Businesses can update product descriptions, sales prices, and information on merchandise availability immediately;
Customers create their own sales orders online;

22. Retail Sales Advantages of Virtual Stores – Slide 4
Customers can track their own orders, freeing business personnel for other tasks, and;
The sales and customer relations personnel required for these virtual stores is minimal, thus reducing labor costs per dollar of sales.

23. E-Payments
With the use of credit cards over the Internet, identity fraud can be a problem.
Electronic payment (E-payment) may be a more desirable payment method.
The most important advantage of E-payment is the ability to identify its users.
E-payment eliminates the need to transmit credit card numbers over the Internet.

24. E-Wallet
E-wallets are software applications that store a consumer’s personal information, including credit card numbers, addresses, and shipping addresses.
The advantage of an e-wallet is that you do not have to enter all your personal information every time you make an online purchase.

25. Business-to-Business E-Commerce
Most e-commerce is business-to-business (B2B).
A major part of B2B e-commerce concerns purchases of supplies and equipment electronically or electronic procurement.
Companies may manage their supply chain by linking e-commerce to internal enterprise resource planning (ERP) systems.

26. Electronic Data Interchange
Electronic Data Interchange (EDI) allows organizations to transmit standard business documents over high-speed data communications channels.
EDI streamlines processes because
business partners exchange documents quickly and easily,
there are no postal delays, and
EDI eliminates most of the paperwork.

27. VAN-based EDI versus Internet-based EDI
To implement EDI applications, most businesses currently use private, point-to-point communication channels called Value-Added Networks (VANs).
An alternative to VAN-based EDI is to use the Internet.
Advantages of Internet-based EDI are the ability to use well-understood Internet technology, a preexisting, costless network to transmit business data, and convenience.
Disadvantages of using Internet-based EDI are data security and lack of consulting expertise in the implementation phase.

28. Privacy and Security on the Internet
The Internet and WWW have the advantage of being very accessible.
Accessibility can also mean “vulnerability.”
, web pages, and computer files can be accessed by someone posing as an authorized user.

29. Privacy and Security
An Internet presence for companies introduces unique privacy and security concerns.
These concerns call for specialized controls that limit data and information access to authorized users.
Authentication involves verifying that users are who they say they are.

30. Firewalls
A firewall guards against unauthorized access to sensitive file information from external Internet users.
This is security software that a company installs on Internet computers and that limits file accesses to authorized users.
Firewall software examines packets of incoming messages using an access control list.
Firewalls cannot prevent spoofing, or masquerading as an authorized user.

31. Proxy Servers
A Proxy Server is a computer and related software that creates a transparent gateway to and from the Internet, and that can be used to control Web accesses.

32. Proxy Servers Five advantages of proxy servers:
Funnel all incoming and outgoing Internet requests through a single server.
Examine all incoming requests for information and test them for authenticity.
Limit employee Internet access to approved Web sites.
Limit information to only Internet-related materials.
Ability to store frequently accessed web pages on the server’s own hard disk.

33. Data Encryption
Data Encryption transforms plaintext messages into unintelligible cyphertext ones using an encryption key.
Data encryption standard (DES) is an encryption scheme used by the U.S. government.
A single key is shared by communicating parties in secret key cryptography.
Public key encryption requires each party to use a pair of public/private encryption keys.

34. Digital Signatures
A digital signature is used to authenticate business documents transmitted or received over the Internet.
In 1994, the digital signature standard (DSS) was adopted by the National Institute of Standards and Technology.
The presence of the digital signature authenticates a document.

35. Digital Certificate
Another authentication technique is the digital certificate.
Digital certificates are verification of identity provided by an independent third party called a certificate authority.
These certificates are signed documents with sender names and public key information.

36. Digital Time Stamping
Many important documents transmitted over the Internet are time sensitive.
Digital time-stamping services (DTSSs) attach digital time stamps to documents.
Time stamps enable businesses to overcome problems of downed file serves or power failures that delay transmission.

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38. Chapter 12