Question 1

Which of the following tools would allow an auditor to most easily and efficiently compare a client company's financial results with those of its competitors?

Accepted Answer

XBRL (eXtensible Business Reporting Language) tagging allows for the efficient comparison of financial data across different companies by standardizing the format. This makes it easier for auditors to analyze and compare a client company's financial results with those of its competitors.

Question 2

Which of the following languages is a financial reporting language developed in part by the accounting profession?

Accepted Answer

Extensible business reporting language (XBRL) is a financial reporting language that was developed in part by the accounting profession to facilitate the standardized electronic communication of financial data. XML, SQL, and HTML are all markup languages but are not specifically designed for financial reporting.

Question 3

Which type of data is more useful in accounting reports that cover a short period of time?

Accepted Answer

The answer of Which type of data is more useful...

Question 4

Which of the following is not used for event coding in accounting information systems?

Accepted Answer

A vendor is not an event but an entity involved in transactions with the business. Events in accounting information systems refer to actions or occurrences that affect the financial position of the company, such as sales or receipt of orders, not the entities (like vendors) that participate in those events.

Question 5

What is the primary benefit of creating XBRL financial reports and electronically disseminating them?

Accepted Answer

The primary benefit of creating XBRL financial reports and electronically disseminating them is that information can be published one time and then extracted electronically for other purposes, thereby eliminating the need to identify and reenter the data. This saves time and reduces errors.

Question 6

Which of the following formats would most likely eliminate reentry of data and significantly reduce reporting costs for a business?

Accepted Answer

XBRL (eXtensible Business Reporting Language) is specifically designed for business information and financial reporting. It allows for the seamless exchange and analysis of financial information between different software applications, eliminating the need for manual reentry of data and reducing reporting costs. Electronic spreadsheets and word processors may still require manual input and do not have the same level of standardization and integration as XBRL. HTML is a markup language used for creating web pages, not specifically designed for financial reporting.

Question 7

What language uses a standardized tag such as <us-gaap-ci:AssetsHeldSale> to enable the retrieval of information about assets held for sale from multiple balance sheets?

Accepted Answer

Extensible Business Reporting Language (XBRL) uses standardized tags to enable the retrieval of financial information. This includes tags such as <us-gaap-ci:AssetsHeldSale> which allows for the retrieval of information about assets held for sale from multiple balance sheets. HTML is used for web page design, SQL is used for database management, and DDL is used for defining database structures.

Question 8

Which of the following is a general principle of effective reporting?

Accepted Answer

Comparative reporting allows for easier understanding and analysis of data by comparing it to previous data or industry benchmarks. This method helps to identify trends and areas for improvement. The other answer choices (A, C, and D) are not principles of effective reporting.

Question 9

Which of the following computer languages is used specifically for Web applications?

Accepted Answer

Extensible markup language (XML) is a language specifically designed for web applications. It is used for storing and organizing data, and is compatible with multiple programming languages. Structured query language (SQL) is used for managing databases, Web services description language (WSL) is used for describing web services, and there is no such language as Enterprise application language (EAL).

Question 10

What is a feature or benefit of comparative reporting?

Accepted Answer

Comparative reporting arranges together actual data for a current period with either budget data for the current period or actual data for a prior period. This helps management to identify variations and make informed decisions based on the comparison.

Answer: C
 Comparative reporting allows management to focus on data with significant deviations from expected results. This helps to identify areas of concern and take appropriate actions to address them. Options A and D are not related to comparative reporting.

Question 11

Reference identifiers are necessary to provide adequate audit trails for which of the following reasons?

Accepted Answer

All of the options listed are reasons why reference identifiers are necessary to provide adequate audit trails. They need to be unique to distinguish between different events, accounts, and documents, and to trace data items' location. Moreover, they set up processing references for audit trails.

Question 12

What type of reporting includes data that measure activities over which a particular manager has some authority?

Accepted Answer

Responsibility reporting is a type of reporting that focuses on data and metrics that measure the activities over which a particular manager or department has control or authority. This type of reporting provides insights into how well a manager or department is performing in their specific area of responsibility. Comparative reporting compares data across different time periods or regions while exception reporting focuses on identifying outliers or anomalies in data. Functional reporting provides data about different functions or departments within an organization.

Question 13

Production managers usually prefer the use of which measure of performance in reports that cover a short period of time?

Accepted Answer

Production managers would prefer physical measures such as units produced, labor hours used, or materials used to assess the productivity of their processes over financial or comparative measures. Physical measures provide a more direct evaluation of the performance of the production process in terms of their actual output, whereas financial measures might be influenced by external factors such as price changes or inflation. Comparing current performance to past performance, or to industry benchmarks might be useful for long-term planning, but for short-term reports, physical measures are more relevant. Exception measures are also useful for highlighting unusual events or problems in the production process.

Question 14

Which of the following languages uses standardized tags for business and financial data so they can be easily searched with web browsers?

Accepted Answer

Extensible Business Reporting Language (XBRL) uses standardized tags for business and financial data, making it easier to search with web browsers. HTML is a markup language for creating web pages, SQL is a language used for managing relational databases, and QBE is a visual query language used to retrieve data from databases.

Question 15

What is one problem with exception reporting?

Accepted Answer

Exception reporting is designed to highlight deviations from expected results, allowing management to focus on significant issues. However, a potential problem is that the format or sorting of the report could result in the most severe problems not being prominently displayed, such as being on the back pages, which might lead to them being overlooked or not addressed promptly. Choices A, B, and D describe intended features or benefits of exception reporting, not problems.

Question 16

Providing reports of production hours worked to production personnel, dollar denominated data to sales personnel, and financial reports to the chief financial officer are examples of what kind of reporting?

Accepted Answer

Providing reports by function means that the reports are organized based on the specific departments of the organization. Production personnel receive reports related to their production hours worked, sales personnel receive dollar denominated data related to sales, and the chief financial officer receives financial reports. This type of reporting allows each department to focus on the information that is most relevant to their function within the organization.

Question 17

Which of the following statements is correct regarding extensible business reporting language (XBRL)?

Accepted Answer

XBRL is a language used for communicating financial data in a standardized and machine-readable way. It is not used for formatting the presentation of financial data or using HTML tags. The purpose of XBRL is to identify the content of each item of financial data and tag it with metadata that describes its meaning, allowing for easier analysis and comparison of financial information. Therefore, option (A) is the correct statement. Option (D) is incorrect as XBRL reports words and figures as tagged elements, not standalone blocks of data.

Question 18

The most common reporting of physical units is for which of the following?

Accepted Answer

Physical units are most commonly used to measure inventory, such as the number of units of a product in stock or the number of units sold. They are not typically used for measuring time (such as unassigned hours or hours billed) or employee turnover rate.

Question 19

What is the format the Securities and Exchange Commission (SEC) has mandated for filing financial information?

Accepted Answer

The Securities and Exchange Commission (SEC) has mandated the use of eXtensible Business Reporting Language (XBRL) for the filing of financial information. XBRL allows companies to standardize and streamline the process of submitting financial statements, making it easier for investors to compare and analyze the financial performance of different companies.

Question 20

Which of the following defines the specific tags for individual items of data when converting a human-readable financial report to HTML?

Accepted Answer

Taxonomy defines the specific tags for individual items of data when converting a human-readable financial report to HTML. It creates a standardized structure for reporting financial information and allows for easier comparison and analysis. Namespace refers to the set of names used to identify a set of elements, while element refers to the individual parts of a document. Instance document is a specific instance of an XML or HTML document.

Quiz 5: Reporting Process, Coding Methods, and Audit Trails