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Copyright2019?McGraw-HillEducation.Allrightsreserved.NoreproductionordistributionwithoutthepriorwrittenconsentofMcGraw-HillEducation.

DataAnalyticsforAccounting,1e(Richardson)

Chapter8UsingFinancialStatementData

1)Artificialintelligence,machinelearning,andsentimentanalysisarethreemethodsusedtoanalyzepubliclytradedcompaniesonNasdaqandtheNYSEtogaininsightandtrackcompanies'businessandfinancialoperations.

Answer:TRUE

Difficulty:1Easy

Topic:IntroductiontoFinancialStatementAnalytics

LearningObjective:08-00Introduction

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

2)Dataanalyticscanhelppredictacompany'srevenue,earnings,andcashflow.

Answer:TRUE

Difficulty:1Easy

Topic:IntroductiontoFinancialStatementAnalytics

LearningObjective:08-00Introduction

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

3)XBRLisaglobalstandardforinternetcommunicationmostlyamongdaytraders.

Answer:FALSE

Difficulty:1Easy

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

4)TheSecuritiesandExchangeCommissionmandatesallpubliclytradedcompaniesfilefinancialstatementspreparedinaccordancewithU.S.GAAP.

Answer:TRUE

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

5)XBRLstandsforeXtensibleBusinessReportingLinguistic.

Answer:FALSE

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

6)ThetwotypesofstandardizedfinancialaccountingareIFRSandU.S.GAAP.

Answer:TRUE

Difficulty:1Easy

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

7)InfilingitsfinancialstatementswiththeSEC,acompanymusttagfivebasicfinancialstatements,whichincludeabalancesheet,incomestatement,statementofcomprehensiveincome,statementofcashflowsandstatementofstockholder'sequity.

Answer:TRUE

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

8)Whenreportingfinancialstatements,detailedtaggingofthenumbersincludedinthefootnotesbyuseofXBRLtagsisalsorequired.

Answer:TRUE

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

9)TheXBRLtaxonomyhelpsdefineanddescribeeachkeydataelement(suchascashoremployeespending).

Answer:FALSE

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

10)Definingover19,000elements,the2017USGAAPFinancialReportingTaxonomytagsuniquefinancialdatatoacomponentwithinthetaxonomy.

Answer:TRUE

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

11)TheXBRLtagforcashislabeledCashandisdefinedasfollows:Amountofcurrencyonhandaswellasdemanddepositswithbanksorfinancialinstitutions.

Answer:TRUE

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

12)Theuseoftagsallowsdatatobeslowlytransmittedandreceivedanditservesasaninputintofinancialanalystsvaluingacompany.Italsocontributestoanauditorfindingareaswhereanerrormightoccur,orregulatorsverifyingiffirmsareincompliancewithvariousregulationsandlaws(likeSECorIRS).

Answer:FALSE

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

13)SometimesoutsidedatavendorscreatestandardizedmetricstomakethecompanyreportedXBRLdatamorecomparable.

Answer:TRUE

Difficulty:1Easy

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

14)ManyfinancialreportingsystemswithinenterprisesystemshavegeneralledgersthatareconsistentwithXBRLcalledXBRL-GL.

Answer:TRUE

Difficulty:1Easy

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

15)OncenumbersareinputintoafinancialsystemusingXBRL-GL,theyarealreadytaggedandabletobetransmittedonthenextdayofbusinesstointerestedusers.

Answer:FALSE

Difficulty:1Easy

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

16)Informationsuchasgoodwillorlong-termdebtwilllikelychangeonaminute-by-minutebasisinreal-timefinancialreporting.

Answer:FALSE

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

17)Financialstatementanalysisisusedbyinvestors,analysts,auditorsandotherinterestedstakeholderstoreviewandevaluateacompany'sfinancialstatementsandfinancialperformance.

Answer:TRUE

Difficulty:1Easy

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

18)Amajorcomponentoffinancialstatementanalysisistheuseofratioanalysis.

Answer:TRUE

Difficulty:1Easy

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

19)Ratioanalysisisatoolusedtoevaluaterelationshipsamongdifferentfinancialstatementitemstohelpunderstandacompany'sfinancialandoperatingperformance.

Answer:TRUE

Difficulty:2Medium

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

20)Therearebasicallyfourtypesofratios:Liquidity,activity,solvency(orfinancing)andprofitabilityratios.

Answer:TRUE

Difficulty:1Easy

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

21)XBRLstandsfor________andisatypeof________.

A)eXtendedBusinessReportingLanguage;HTML

B)eXtendedBusinessReportingLanguage;XML

C)eXtensibleBusinessReportingLanguage;XML

D)eXtensibleBusinessReportingLanguage;HTML

Answer:C

Difficulty:1Easy

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

22)XBRLisusedfor________and________financialelements.

A)organizing;defining

B)organizing;determining

C)obscuring;defining

D)obscuring;determining

Answer:A

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Remember

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

23)TheSecuritiesandExchangeCommissionrequiresallpubliccompanyfilerstouseXBRLtagginginallofthefollowingfinancialstatementsexcept:

A)BalanceSheet

B)StatementofComprehensiveIncome

C)StatementofCashFlows

D)StatementofChangesinWorkingCapital

Answer:D

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

24)XBRLusesa________tohelpdescribeeachkeydataelement.

A)taxonomy

B)datadictionary

C)schema

D)terminology

Answer:A

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

25)WhichofthefollowingisnotatypeoftaggingwithXBRL?

A)years

B)figures

C)hieroglyphs

D)text

Answer:C

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

26)Accordingtotheauthors,theuseoftagsallowsdatatobequickly________.

A)cleanedandprepared

B)transformedandreceived

C)sortedandreconfigured

D)transmittedandreceived

Answer:D

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

27)Theauthorsdiscussallofthefollowingwaysinwhichtagscanserveasaninputexcept:

A)regulatorsseeingifauditfirmsareincompliancewithvariousregulationsandlaws.

B)regulatorsseeingifcompaniesareincompliancewithvariousregulationsandlaws.

C)financialanalystsvaluingacompany.

D)anauditorfindingareaswhereanerrormightoccur.

Answer:A

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

28)Whichofthefollowingstatementsisfalse?

A)Firmscanmaketheirowntagsiftheyfeeltheirfinancialdataitemdoesnotfitwithintheexistingframework.

B)Sometimesverysimilarfinancialdataitemshaveuniquetags,makingdirectcomparisonsbetweencompaniesdifficult.

C)Detailedtaggingofthenumbersincludedinthefootnotesisrequired.

D)XBRLusesataxonomytohelpdefineanddescribeeachkeydataelement,butitisnotcapableofdefiningrelationshipsbetweeneachelement.

Answer:D

Difficulty:2Medium

Topic:XBRL

LearningObjective:08-01DescribeHowXBRLTagsFinancialReportingData

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

29)UsingthetablebelowcomputeprofitmarginforQ3,2011forDuPont(Ticker=DD).

ticker

year

period

revenue

costofrevenue

assets

equity

DD

2010

Y

$

28,899,000,000

$

20,574,000,000

$

40,410,000,000

$

9,800,000,000

DD

2011

Q1

10,059,000,000

6,831,000,000

42,600,000,000

11,279,000,000

DD

2011

Q2

10,493,000,000

7,191,000,000

47,736,000,000

12,502,000,000

DD

2011

Q3

8,303,000,000

6,345,000,000

47,794,000,000

12,024,000,000

DD

2011

Y

34,423,000,000

21,264,000,000

48,643,000,000

9,208,000,000

DD

2012

Q1

$

10,194,000,000

$

6,816,000,000

$

50,223,000,000

$

10,427,000,000

A)22.0%

B)31.5%

C)30.9%

D)23.6%

Answer:D

Difficulty:2Medium

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

30)UsingthetablebelowcomputeoperatingleverageforQ3,2011forDuPont(Ticker=DD).

ticker

year

period

revenue

costofrevenue

assets

equity

DD

2010

Y

$

28,899,000,000

$

20,574,000,000

$

40,410,000,000

$

9,800,000,000

DD

2011

Q1

10,059,000,000

6,831,000,000

42,600,000,000

11,279,000,000

DD

2011

Q2

10,493,000,000

7,191,000,000

47,736,000,000

12,502,000,000

DD

2011

Q3

8,303,000,000

6,345,000,000

47,794,000,000

12,024,000,000

DD

2011

Y

34,423,000,000

21,264,000,000

48,643,000,000

9,208,000,000

DD

2012

Q1

$

10,194,000,000

$

6,816,000,000

$

50,223,000,000

$

10,427,000,000

A)13.3%

B)17.4%

C)25.2%

D)52.8%

Answer:B

Difficulty:2Medium

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

31)UsingthetablebelowcomputeROEforQ3,2011forDuPont(Ticker=DD).

ticker

year

period

revenue

costofrevenue

assets

equity

DD

2010

Y

$

28,899,000,000

$

20,574,000,000

$

40,410,000,000

$

9,800,000,000

DD

2011

Q1

10,059,000,000

6,831,000,000

42,600,000,000

11,279,000,000

DD

2011

Q2

10,493,000,000

7,191,000,000

47,736,000,000

12,502,000,000

DD

2011

Q3

8,303,000,000

6,345,000,000

47,794,000,000

12,024,000,000

DD

2011

Y

34,423,000,000

21,264,000,000

48,643,000,000

9,208,000,000

DD

2012

Q1

$

10,194,000,000

$

6,816,000,000

$

50,223,000,000

$

10,427,000,000

A)12.4%

B)16.3%

C)21.3%

D)26.6%

Answer:B

Difficulty:2Medium

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

32)UsingthetablebelowcomputeROEfor2011year-endforDuPont(Ticker=DD).

ticker

year

period

revenue

costofrevenue

assets

equity

DD

2010

Y

$

28,899,000,000

$

20,574,000,000

$

40,410,000,000

$

9,800,000,000

DD

2011

Q1

10,059,000,000

6,831,000,000

42,600,000,000

11,279,000,000

DD

2011

Q2

10,493,000,000

7,191,000,000

47,736,000,000

12,502,000,000

DD

2011

Q3

8,303,000,000

6,345,000,000

47,794,000,000

12,024,000,000

DD

2011

Y

34,423,000,000

21,264,000,000

48,643,000,000

9,208,000,000

DD

2012

Q1

$

10,194,000,000

$

6,816,000,000

$

50,223,000,000

$

10,427,000,000

A)149.2%

B)70.8%

C)84.9%

D)142.9%

Answer:D

Difficulty:2Medium

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

33)Accordingtothetext,researchfindsthatastheuseof________wordsinthe10-k________thestockmarketreacts________.

A)negative;decreases;negatively

B)negative;increases;negatively

C)positive;increases;negatively

D)positive;decreases;positively

Answer:B

Difficulty:2Medium

Topic:TextMiningandSentimentAnalysis

LearningObjective:08-04DescribetheValueofTextMiningandSentimentAnalysisofFinancialReporting

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

34)Sparklinesaregenerally________andshow________trends.

A)small;similar

B)large;simple

C)small;simple

D)large;similar

Answer:C

Difficulty:2Medium

Topic:TheUseofSparklinesandTrendlinesinRatioAnalysis

LearningObjective:08-03ExplainHowtoCreateandReadVisualizationsofFinancialStatementData

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

35)Withregardtosparklines,whichofthefollowingstatementsisfalse?

A)Sparklinescanallowfinancialstatementuserstoeasilyseethedatavisuallyandgivemeaningtotheunderlyingfinancialdata.

B)Sparklinescanbeaddedtoadigitaldashboardthatalreadyhasmanychartsanddials,withoutclutteringuptheoverallappearanceofadashboard.

C)Sparklinescan,generally,fitinasinglecellwithinaspreadsheet.

D)Sparklinescaneasilyaddtothedatawithoutdetractingfromthetabularresults.

Answer:B

Difficulty:2Medium

Topic:TheUseofSparklinesandTrendlinesinRatioAnalysis

LearningObjective:08-03ExplainHowtoCreateandReadVisualizationsofFinancialStatementData

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

36)Liquidityratiosmeasure________.

A)afirm'sabilitytopayshort-termobligationsusingcurrentassets

B)afirm'soperatingefficiency

C)afirm'sabilitytopaytheirdebtsandstayinbusiness

D)afirm'sabilitytogenerateearningsrelativeexpenses

Answer:A

Difficulty:3Hard

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

37)Activityratiosmeasure________.

A)afirm'sabilitytopayshort-termobligationsusingcurrentassets

B)afirm'soperatingefficiency

C)afirm'sabilitytopaytheirdebtsandstayinbusiness

D)afirm'sabilitytogenerateearningsrelativeexpenses

Answer:B

Difficulty:3Hard

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

38)Profitabilityratiosmeasure________.

A)afirm'sabilitytopayshort-termobligationsusingcurrentassets

B)afirm'soperatingefficiency

C)afirm'sabilitytopaytheirdebtsandstayinbusiness

D)afirm'sabilitytogenerateearningsrelativeexpenses

Answer:D

Difficulty:3Hard

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

39)Solvencyratiosmeasure________.

A)afirm'sabilitytopayshort-termobligationsusingcurrentassets

B)afirm'soperatingefficiency

C)afirm'sabilitytopaytheirdebtsandstayinbusiness

D)afirm'sabilitytogenerateearningsrelativeexpenses

Answer:C

Difficulty:2Medium

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

40)Profitmarginisanexampleofwhichtypeofratio?

A)solvencyratio

B)profitabilityratio

C)liquidityratio

D)activityratio

Answer:B

Difficulty:2Medium

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

41)Returnonassetsisanexampleofwhichtypeofratio?

A)solvencyratio

B)profitabilityratio

C)liquidityratio

D)activityratio

Answer:B

Difficulty:2Medium

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

42)Returnonequityisanexampleofwhichtypeofratio?

A)solvencyratio

B)profitabilityratio

C)liquidityratio

D)activityratio

Answer:B

Difficulty:2Medium

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

43)Long-termdebttoequityratiosareexamplesofwhichtypeofratio?

A)solvencyratio

B)profitabilityratio

C)liquidityratio

D)activityratio

Answer:A

Difficulty:2Medium

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

44)Debt-to-equityratioisanexampleofwhichtypeofratio?

A)solvencyratio

B)profitabilityratio

C)liquidityratio

D)activityratio

Answer:A

Difficulty:2Medium

Topic:RatioAnalysis

LearningObjective:08-02UnderstandHowDifferentTypesofRatioAnalysisCanbeFacilitatedbyXBRL

Bloom's:Understand

AACSB:ReflectiveThinking

AICPA:BBIndustry;FNDecisionMaking

45)Inventoryturnoverratioisanexampleofwhichtypeofratio?

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