Information systems have impact on financial results. Using Figure 1-8 as a guide, which system is most likely to impact the following line items on an income statement. The systems to consider are enterprise systems, supply chain systems, and customer relationship management systems.

FIGURE 1.8: The Potential Effect of AIS on an Income Statement

Income Statement Item ____________________________________________ System
Revenues .............................................................................................................
Cost of goods sold ..............................................................................................
Sales, general, and administrative expenses ..................................................
Interest expense ................................................................................................
Net Income ..........................................................................................................

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Income Statement Effect of AIS on Income Statement Revenues Customer relationship management (CRM) techniques could attract new customers, generating additional sales revenue. Less: Cost of Goods Sold Supply chain management (SCM) software allows firms to carry the right inventory and have it in the right place at the right time. This, in turn, will lower obsolescence as well as logistics and procurement costs. Gross Margin The gross margin will change as the result of changes in revenues or cost of goods sold due to the effects of AIS. Less: Selling, General, and Administrative An efficient enterprise system can significantly lower the cost of support processes included in sales, general, and administrative expenses. Expenses (SG&A) SCM software allows the firm to carry less inventory. Less inventory leaves less assets to finance and may possibly reduce debt and its Less: Interest Expense related interest. Net Income All combined, a well-designed and well-functioning AIS with investments in enterprise systems, SCM, and/or CRM may be expected to improve net income.