ACC 324: Midterm - Terms and Practice Questions

Management accounting uses variance analysis to explain what and why something happened in the cost of producing products. It is done by comparing actual outcomes to expected, or standard, costs. What is the expectation when the price of raw materials unexpectedly decreases below the standard price?

Favorable price variance

Data Example for: These are the columns that contain descriptive information about the observations in the table. Specific types of fields are primary keys and foreign keys.

Fields

Statistical Technique for: Finding the frequency of all transactions, from the minimum to the maximum

Histogram

Stage of the AMPS Model for: The data has lots of missing data. The data comes from last year's financial statements.

Master the Data

Descriptive analytic measures of variability include all except which of the following?

Medians

Stated Advantage of Using Relational Databases (Yes, No): Reduces physical access to data and computers.

No

Stated Advantage of Using Relational Databases (Yes, No): Reduces possibility of updating data without permission of the database administrator.

No

Stated Advantage of Using Relational Databases (Yes, No): Removes the necessity of auditing the data.

No

Question Type for: If we have all 12/31 year-end audit clients, how will we organize our audit work in the new year?

What should we do based on what we expect will happen? How do we optimize our performance based on potential constraints?

Statistical Technique for: Minimizing tax payment based on expected changes in tax legislation

What-if/Goal Seek

Which type of question does diagnostic analytics address?

Why did it happen?

Question Type for: Can our variance analysis help explain why the labor expenses increased over the past year?

Why did it happen? What are the root causes of past results?

Question Type for: Can the IRS find those individuals or corporations evading taxes using predictive techniques?

Will it happen in the future? What is the probability something will happen? Is it forecastable?

Stated Advantage of Using Relational Databases (Yes, No): Many preventive internal controls (such as ensuring that suppliers that we write checks to are verified suppliers in our system) are easier to enforce.

Yes

Stated Advantage of Using Relational Databases (Yes, No): Reduced redundancy cuts down on errors.

Yes

Stated Advantage of Using Relational Databases (Yes, No): Reduces the possibility of having more than one version of the truth.

Yes

Stated Advantage of Using Relational Databases (Yes, No): Security around data entry and table access can aid in creating and enforcing data entry internal controls.

Yes

The Northwinds database has several tables, including Products, Suppliers, and Categories. A subset of the Products table is provided, which details all the products that a fictional company named Northwinds sells. The Northwinds database is generously provided by Microsoft as an example database. c. If you averaged Unit Price, would you obtain a useful number?

Yes

normal distribution

a bell-shaped probability distribution that is symmetric about its mean, with the data points closer to the mean more frequent than those data points further from its mean

parameter

a characteristic of a population

statistic

a characteristic of a sample

foreign keys

a column (or group of columns) that exist to create relationships between two tables, linking to the primary key in another table

primary key

a column in a relational table/database that serves as a unique identifier

segregation of duties (separation of duties)

a common internal control that requires more than one person to complete each accounting task

graphs (line, bar, or column charts)

a diagram showing interrelationships between two or more variables

dashboard

a graphical summary of various measures tracked by a company

population

a group of phenomena that have something in common and includes all relevant parts

Bloom's Taxonomy

a hierarchical view of thinking and learning skills

alternative hypothesis (Ha)

a hypothesis used in hypothesis testing that is opposite of the null hypothesis, a potential result that the analyst may expect

relational database

a means of storing data in order to ensure that the data are complete, not redundant, and to help enforce business rules; made up of tables that are related to one another, and each table contains fields and records; and also aid in communication and integration of business processes across an organization

ranking

a position on a scale

uniform distribution

a probability distribution where all outcomes are equally likely

probability distribution

a statistical property (or function) that describes the possible values and the likelihood that a random variable will be in a given range

two-sample t-test difference of means

a statistical test to evaluate if the means of two different populations are the same

sample

a subset of members of a population selected to represent the population

fuzzy matching

a technique used to find potential matches when there is less than an exact match

PivotTables

a tool that allows reorganization and summarization of certain data using crosstabulations without changing the underlying spreadsheet (or data)

time series analytics

a tool/technique used to predict future values based on past values of the same variable

pivot chart

a visualization of summarizations included in the PivotTable

information overload

access or exposure to too much information to be able to process

null hypothesis (H0)

an assumption that the hypothesized relationship does not exist, that there is no significant difference between two samples or populations

standard cost

an estimated, or expected, cost of producing a good or service used in management accounting

outlier

an observation that lies outside its expected distribution

descriptive analytics

analysis performed that characterizes, summarizes, and organizes features and properties of the data to facilitate understanding

predictive analytics

analysis performed to provide foresight by identifying patterns in historical data by judging likelihood or probability

diagnostic analytics

analytics performed to investigate the underlying cause that cannot be answered by simply looking at the descriptive data

drill-down analytics

analytics that looks for underlying patterns in the data by examining the data at a more detailed level

financial accounting data

any information external decisions makers, such as stockholders, banks, and suppliers, might use to help make decisions

nominal data

categorical data that cannot be ranked; examples include transaction type (purchase, return)

ordinal data

categorical data with natural, ranked categories (examples include letter grades) and Olympic medals

dynamic

characterized by constant update, change, or activity

static

characterized by the lack of constant update, change, or activity

sunk cost fallacy

commitment to prior investments escalates and makes it harder to abandon prior investments even if it many not make rational sense

numerical data

data represented by meaningful numbers, such as amount, age, or the score on an exam

categorical data

data that is represented by words--such as grouping a collection of people by gender, or categorizing transaction types

unstructured data

data without internal organization (or structure); blogs and social media and pictures posted in Instagram would both be examples

semi-structured data

data without internal organization or structure but that has tags explaining what the data represents

Big Data

datasets that too large and complex for businesses' existing systems (traditional capabilities) to capture, store, manage, and analyze (four V's: volume, veracity, variety, and velocity)

deterministic analysis

descriptive and diagnostic

Poisson distribution

distribution defined as the mean number of events per interval of space or time

deciles

division of data observations into 10 defined intervals based on data values as way of comparing to the overall data set

quartiles

division of data observations into four defined intervals based on data values as way of comparing to the overall data set

The 2011 movie Moneyball is an example of _____ analytics applied to the sport of baseball

drill-down, detailed

vertical analysis

expresses financial information in relation to some relevant figure or base

Accounting Data Analytics

the technologies, systems, practices, methodologies, databases, statistics, and applications used to analyze diverse accounting and non-accounting data to give organizations the information they need to make sound and timely business decisions

correlation

to understand if and the extent to which variables are related to each other

descriptive statistics

to understand the basic statistics, including the mean, standard deviation, minimums, and maximums of a data set (brief summaries or factoids of a data set that provide a representation of that data as a whole)

histogram

to understand the frequency of the data using a display of rectangles with area proportional to the underlying frequency of the data

t-tests

to understand the probability of a statistical difference in means between either two independent samples or a paired sample through time

If there were fake news presented by someone trying to sway an opinion (or a vote), that would bring into question which aspect of Big Data?

Veracity

Question Type for: How much did we pay in federal taxes last year? Did the airline company's on-time departures improve this past month?

What happened? What is happening?

Which type of question does prescriptive analytics address?

What should we do based on what we expect will happen?

confidence interval

the probability that a population parameter will fall between two set values

Data Analytics

the process of evaluating data with the purpose of drawing conclusions to address all types of questions, including accounting questions

persistence

the repeatability and durability of the financial statement variables, or the strength of the relationship between the past and the future values of one financial statement variable

visualizations

the representation of information as a graph, chart, or other image

The SEC form which reports quarterly financial statements is called form _____

10-Q

How many standard deviations are above the mean?

2 =(130-100)/15

If your IQ is 130, the average population IQ is 100, and the standard deviation is 15, what is your z-score?

2 =(130-100)/15

If the average IQ of the population is 100 and the standard deviation is 15, what is the 95 percent confidence interval?

70 and 130 =[100 +/- 2(15)]

An announcement of a new CEO would most likely be reported on which SEC form?

8-K

If there are 6 transactions on 11/1, 3 transactions on 11/2 and 10 transactions on 11/3, what is the proportion of the 11/1 transactions to the total transactions that occur during the first three days of November?

=6/19

data dictionary

A centralized repository of information about data containing a separate record for each field/variable in the database

Diagnostic Analytics Term for: Something that departs, or deviates, from the norm or the expectation.

Anomaly

Stage of the AMPS Model for: Management wants answers on why certain products are unprofitable.

Ask the Question

Which component of the AMPS model most appropriately addresses the axiom, "Your data won't speak unless you ask it the right data analytics questions"?

Ask the Question

Statistical Technique for: Looking for potentially fraudulent transactions

Benford's Law

Accounting Task: Breaking down information into component parts.

Bloom's Taxonomy Component: Analyze Advantage: Human

Accounting Task: Applying the facts, rules, concepts, and ideas.

Bloom's Taxonomy Component: Apply Advantage: Machine

Accounting Task: Combining parts to make a new whole.

Bloom's Taxonomy Component: Create Advantage: Human

Accounting Task: Judging the value of information or ideas.

Bloom's Taxonomy Component: Evaluate Advantage: Human

Accounting Task: Recognizing and recalling facts.

Bloom's Taxonomy Component: Remember Advantage: Machine

Accounting Task: Comprehending what the facts mean.

Bloom's Taxonomy Component: Understand Advantage: Machine

The Northwinds database has several tables, including Products, Suppliers, and Categories. A subset of the Products table is provided, which details all the products that a fictional company named Northwinds sells. The Northwinds database is generously provided by Microsoft as an example database. d. What does the field Supplier ID represent?

Categorical

What would be most likely to be disclosed in an 8-K filing to the SEC?

Change in auditor

Which is the highest level of skills in Bloom's Taxonomy?

Create

What tool or technique is used to quantitatively analyze the relationship between and among multiple variables?

Cross-tabulations

Which measure would help us evaluate what happens in the highest and lowest 10 percent of the data?

Deciles

Diagnostic Analytics Term for: Brief summaries (or factoids) of a data set that provide a representation of the data set as a whole.

Descriptive analytics

Diagnostic Analytics Term for: Analytics performed to investigate the underlying cause that cannot be answered by simply looking at the descriptive data.

Diagnostic analytics

A data map is a centralized repository of information about data containing a separate record for each field/variable in the database

False

Diagnostic Analytics emphasizes "What happened?"

False

Foreign keys are required in every relational database table

False

Nominal data is numerical data that cannot be ranked

False

One of the primary internal control benefits of storing data in a relational database is increased redundancy cuts down on errors

False

Data Example for: These are the columns that contain descriptive information about the observations in the table. Specific types of variables are primary keys and foreign keys.

Variables

Diagnostic Analytics Term for: Identifying the difference between a budget amount and actual performance.

Variance analysis

The Northwinds database has several tables, including Products, Suppliers, and Categories. A subset of the Products table is provided, which details all the products that a fictional company named Northwinds sells. The Northwinds database is generously provided by Microsoft as an example database. b. If you averaged everything in the Supplier ID field, would you obtain a useful number?

No

Analysis using Benford Law "Useful" or "Not Useful": $500 is the minimum refund ATM withdrawals are in $20 denominations ($20, $40, $60, etc.) Each participant receives $100 if they participated in the survey

Not Useful

What is an observation that lies outside its expected distribution?

Outlier

Data Analytics Question: The analysis was done using a sort command. Which audit tests were performed on the data?

Perform the Analysis

Diagnostic analytics is broken down into all except for which of the following broad categories?

Performing descriptive analytics

Statistical Technique for: Displaying total accounts receivable balance by days overdue (aging)

PivotTable

Which distribution is a probability distribution with a low mean and highly skewed to the right?

Poisson distribution

The calculation for return on equity using Dupont Analysis would be as follows:

Profit margin × Asset turnover × Financial leverage

Data Example for: These are the rows in a table; each row, or record, corresponds to a unique instance of what is being described in the table.

Records

Statistical Technique for: Segregating total costs into fixed and variable cost components

Regression analysis

What does that suggest about your IQ compared to the population?

Reject the null hypothesis

Which is the lowest level of skills in Bloom's Taxonomy?

Remember

Diagnostic Analytics Term for: Test to see if the key number field in the record is in correct ascending or descending sequence.

Sequence check

A visualization may be used to help with which component of the AMPS model?

Share the Story

Stage of the AMPS Model for: Should we report this with a graph or in a table? A dashboard is used to communicate the results.

Share the Story

Data Example for: Data organized into sets of columns (fields) and rows (records)

Tables

In vertical analysis, the relevant base for long-term debt is which of the following?

Total assets

"Ask the Right Question" is one of the desired skills for accounting professionals, consistent with EY's "The Analytics Mindset"

True

"What should we do based on what we expect will happen?" is investigated using Prescriptive Analytics

True

A realistic expectation an accountant could hold is that addresses of the company vendors are not similar to that of the company employees

True

According to the AMPS model, the analyst should know the question they are trying to address before considering and accessing available data

True

An earnings call is a conference call between company management (like a CEO and CFO), analysts, investors, and the media to discuss earnings and other financial results that generally precede the call

True

Data with greater veracity is often more impactful, carrying more weight in analysis than data with lesser veracity in addressing accounting questions

True

Department stores have faster asset turnover than airline companies

True

Optimization is most closely associated with prescriptive analytics

True

Optimization is most closely associated with prescriptive analytics.

True

Predictive Analytics emphasizes "Will something happen in the future?"

True

Primary keys are required in every relational database table

True

Ratio data has an absolute zero

True

Standard cost is an estimated, or expected, cost of producing a good or service used in management accounting

True

The dollar amounts included in the financial statements would be examples of ratio data

True

There is more social media data than financial statement data available

True

Version control reduces the possibility of having more than one version of the data on different computers

True

The Northwinds database has several tables, including Products, Suppliers, and Categories. A subset of the Products table is provided, which details all the products that a fictional company named Northwinds sells. The Northwinds database is generously provided by Microsoft as an example database. a. Glancing through each variable in the Products table, which stand out as numerical data, that is, data that would be interesting to add or average?

Unit Price, Units in Stock, Units on Order, Reorder Level

The Northwinds database has several tables, including Products, Suppliers, and Categories. A subset of the Products table is provided, which details all the products that a fictional company named Northwinds sells. The Northwinds database is generously provided by Microsoft as an example database. e. Which fields should you use to calculate when it's time to reorder a product?

Units In Stock and Units On Order

Analysis using Benford Law "Useful" or "Not Useful": Each sales transaction amount Total Assets of the Fortune 500

Useful

The Northwinds database has several tables, including Products, Suppliers, and Categories. A subset of the Products table is provided, which details all the products that a fictional company named Northwinds sells. The Northwinds database is generously provided by Microsoft as an example database. f-1. If you were to create a meaningful report regarding when products should be reordered, which fields would you include? f-2. Which fields would you create via numerical calculations?

f-1. Product Level, Reorder Level f-2. Units in Stock, Units On Order

Whereas _______ would generally be considered to structured data, _______ would generally be considered to be unstructured data

financial statements; product reviews

The biggest difference between a 10-K and a 10-Q is the _______ disclosure

frequency of

What are the levels of Boom's Taxonomy?

from lowest levels of thinking in (1) remember, (2) understand, (3) apply, to higher levels of thinking in (4) analyze, (5) evaluate, and (6) create

Tableau shows you are importing a geographical variable by showing the __________ icon

globe

entity-relationship (ER) diagram

graphical representation of an information system, illustrating relationships among people, objects, places, and events within that system

structured data

highly organized data that fits nicely in a table or in a database; an excel spreadsheet, or balance sheet or income statement is a good example

variance analysis

identifying the difference between a budget amount and actual performance; commonly used in management accounting

The best way to analyze the extreme values in the sample would be to consider the _______

maximum or minimum

return on assets (ROA)

measure of profitability for each dollar of resources (assets) available for management to use

return on equity (ROE)

measure of profitability generated for each dollar of stockholders' investment

interval data

numerical data measured along with a scale; examples include a thermometer or SAT scores

ratio data

numerical data with an equal and definitive ratio between each data point; absolute "zero" in ratio data is the point of origin

A _______ t-test has more power than a _______ t-test

one-tailed; two-tailed

When the source data used to create an Excel pivottable change, the pivottable will update __________

only when the pivottable is "refreshed"

The third step of the AMPS model is _____

perform the analysis

An example of unstructured data would include __________

pictures

classification

predictive analytics technique to separate or classify a sample (or population) into one or more groups or classes

regression

predictive analytics technique used to predict a specific dependent variable value based on independent variable inputs

probabilistic analysis

predictive and prescriptive

An example of structured data would include __________

product reviews

horizontal analysis

provides comparative changes about various line items of each financial statement over time

ratio analysis

quantitative analysis of financial statement items to help evaluate liquidity, solvency, profitability, and efficiency of the underlying company

A _____ is used to access data from a larger dataset needed for analysis

query or macro

Earnings per share would be considered to be __________ data

ratio

A row that corresponds to a unique instance of what is being described in the table is called a(n) __________

record

The appropriate test to see if independent variables are related to a dependent variable is called a(n) _______

regression

If p-value < = alpha threshold, you should:

reject the null hypothesis (i.e., significant result)

anomaly

something that departs, or deviates, from the norm or the expectation

The best way to analyze the variability in the sample would be to consider the _______

standard deviation

database

structured set of data generally held in a computer allowing access by many potential users

DuPont analysis

summarizes and disaggregates company performance into three ratios: profit margin, asset turnover and financial leverage

sequence check

test to see if the key number field in the record is in correct ascending or descending sequence

data integrity

the accuracy, validity, and consistency of data used and stored over time

percentage change

the extent to which a data item gains or loses magnitude or value

proportion

the number of observations in one category; that number is then divided by the grand total numbers of all available observations

counts

the number of occurrences of a certain data item or event

management by exception

the practice of bringing specific issues to the attention of management if they depart from expectation

Benford's Law

the principle that in any large, randomly produced set of natural numbers, there is an expected distribution of the first, or leading, digit with there being more 1's, 2's, next most and down successively to the number 9