Chapters 5-9
To compute the percentage change in a horizontal analysis from last year to this year, the computation will be:
(Current Year - Last Year)/ Last Year
If the profit margin is 0.1142, asset turnover is 0.5619 and financial leverage is 1.2937, what is the return on asset?
0.0642
If the profit margin is 0.1142, asset turnover is 0.5619 and financial leverage is 1.2937, what is the return on equity?
0.0830
According to the normal distribution, __________% of the data would fit within 1 standard deviations of the mean.
68
All other things equal, in which of the following buckets would you expect the least amount of aged receivables to be?
91-120
According to the normal distribution, __________% of the data would fit within 2 standard deviations of the mean.
95
Which analytics tool or technique is generally used in descriptive analytics?
horizontal analytics
When using regression analysis, the relationship between two variables matters when you are trying to understand __________.
how an independent variable impacts a dependent variable
Testing for duplicate transactions is an example of what type of diagnostic analytics?
identifying anomalies and outliers
Performing a bank reconciliation is example of the diagnostic analytics of __________.
identifying anomalies/outliers
Predictive and prescriptive analytics provide __________ deterministic output and __________ probabilistic models (judging the likelihood (probability) of a future event or outcome occurring) as compared to descriptive and diagnostic analytics.
less; more
What would be the independent variable in a regression determining "How are firm overhead costs dependent on the time for production?" at a manufacturing company?
machine hours
The practice of bringing specific issues to the attention of management if they depart from expectation is called __________.
management by exception
Of the following measures, the best way to analyze the extreme values in the sample is to consider the __________.
maximum or minimum
The __________ recent the accounts receivable (i.e., shorter amount of time it has been outstanding), the __________ likely it will be that they will ultimately be collected.
more, more
If the hypothesized relationship is assumed to not exist, this would be an example of a(n) __________ hypothesis.
null
What is an observation that lies outside its expected distribution?
outlier
A __________ is a characteristic of a population.
parameter
Diagnostic analytics is broken down into all except for which of the following broad categories?
performing descriptive analytics
Analytics of the inventory item that produces the most profit is an example of the diagnostic analytics of __________.
performing drill-down detailed analytics
Diagnostic analysis includes all of the possible types of analytics except for which of the following?
performing marginal analysis
__________ is the repeatability of the financial statement variables (e.g., earnings, sales, cash flows) over time.
persistence
While a __________ reorganizes and summarizes certain data using cross-tabulations without changing the underlying spreadsheet (or data), a __________ is a graphical depiction of those cross-tabulations.
pivottable; pivot chart
__________ are brief, generally small, visuals that fit within one cell in Excel that visually depict what happened in the cells next to it.
sparklines
Of the following measures, the best way to analyze the variability in the sample is to consider the __________.
standard deviation
A z-score tells us how many __________, a data point (or observation), xi, is from its population mean, μ?
standard deviations
Descriptive analytics are characterized by __________ of the relevant data.
summarization
A histogram is used to understand:
the frequency of the data using a display of rectangles with area proportional to the underlying frequency of the data
A regression is used to understand:
the relation between specific dependent variable values and independent variable inputs
Forecasting sales for budget purposes is an example of which type of predictive analytics?
time series
Using past performance to predict future performance is called __________.
time series
In vertical analysis, the relevant base for long-term debt is which of the following?
total assets
What would be the dependent variable in a regression determining "How are firm costs dependent on the level of production?" at a decking company?
total production costs
Descriptive analytics would be more likely to use these tools in its analysis than other types of analytics?
totals, sums, averages, and subtotals
Of the following measures, the best measure for evaluating firm efficiency in handling and using assets is __________.
asset turnover
If the data analyst hypothesizes that grocery sales are higher on Sunday than on other days, the null hypothesis would likely state that:
Grocery sales are lower or no different on Sunday than on other days.
Profit margin is computed as follows:
Net profit (net income) / Sales
The calculation for return on equity using Dupont Analysis is:
Profit margin x Asset turnover x Financial leverage
Asset turnover is computed as follows:
Sales / Assets
Which type of question does prescriptive analytics address?
What should we do based on what we expect will happen?
Diagnostic analytics addresses which of the following questions?
Why did it happen?
The persistence of operating income as compared to cash flows from operations is consistent with GAAP requiring the use of __________ accounting for financial reporting purposes.
accrual-basis
If we are running a regression to analyze the question if advertising expenses are related to sales revenue outcomes, what would be the independent variable?
advertising expenses
A(n) __________ hypothesis is a hypothesis used in hypothesis testing that is opposite of the null hypothesis, or a potential result that the analyst may expect.
alternative
If we run a regression where y (bankruptcy) = f (factors potentially predicting bankruptcy), what is the dependent variable?
bankruptcy
Which predictive analytics technique would be used to predict whether a firm is likely to have a material misstatement in the coming year?
classification
In a bank reconciliation, outstanding checks are recorded by the __________, but not yet by the __________.
company; bank
The probability that a population parameter will fall between two set values is called a __________.
confidence interval
__________ analytics are often the first type of analytics performed that leads to other types of analytics for further investigation.
descriptive
Which type of analytics would encompass compiling the financial statements?
descriptive analytics
Evaluating the relationship between R&D expenditures and net income is an example of the diagnostic analytics of __________.
determining relations/patterns/linkages between variables through statistical analysis
If we run a regression where y (bankruptcy) = f (factors potentially predicting bankruptcy), what is the independent variable?
factors potentially predicting bankruptcy
According to Benford's law, numbers with the first digit "4" are more likely than those with first digit "3".
false
Diagnostic analytics emphasizes "What happened?".
false
Dupont analysis allows an analysis of profit margins, asset turnover and liquidity.
false
We would expect a positive relationship (+) between loan acceptance and the debt-to-income ratio.
false
Which type of analysis would predictive analytics not be useful?
finding anomalies and outliers
__________ is used to help find customers that might have a similar address or name as employees.
fuzzy matching
Prescriptive analytics would be more likely to use these tools in its analysis than other types of analytics?
goal-seek analysis, what-if analysis
According to Altman's Z, the __________ amount of long-term profitability generally leads to __________ risk of bankruptcy.
greater; lower
A __________ is a display of rectangles with area proportional to the underlying frequency of the data.
histogram
An illustration of the total aged receivables in each 30-day bucket is an example of a __________.
histogram
__________ provides comparative changes about various line items of each financial statement over time.
horizontal analysis
Which type of analytics will forecast sales?
predictive analytics
Which type of analytics will provide insight on whether the company should rent or own its headquarters?
prescriptive analytics
Comparing the extent of long-term debt to equity is an example of __________.
ratio analysis
Descriptive quantitative analytic measures of financial statements to help evaluate liquidity, solvency, profitability and efficiency are called __________.
ratio analysis
Estimating the appropriate cost driver as part of activity-based costing is an example of which type of predictive analytics?
regression
Which ratio does not include a component to evaluate financial leverage?
return on assets
In vertical analysis, the relevant base for cost of goods sold is which of the following?
sales revenue
A statistic is a characteristic of a __________.
sample
A __________ is a subset of members selected to represent the __________.
sample; population
The test to see if the key number field in a record is in correct ascending or descending order is called a(n) __________ check.
sequence
If p-value of a statistical test is 0.09 and a 95% confidence interval, you
should fail to reject the null hypothesis (i.e., not significant result)
If p-value of a statistical test is 0.04 and alpha is 0.10, you
should reject the null hypothesis (i.e., significant result)
If p-value of a statistical test is 0.09 and is evaluated with a 90% confidence interval, you
should reject the null hypothesis (i.e., significant result)
If the p-value of the chi-square test is __________ than the α (alpha) threshold, we could conclude that the observed relationship is __________ than that expected from Benford's law.
smaller; different
A company's descriptive statistics are appropriately compared to either 1) the economy as a whole, 2) the company's respective industry, 3) competitors and 4) the company's own prior performance.
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
A realistic expectation an accountant may hold is that "Most accounting transactions are made and recorded during normal work hours and normal workdays".
true
Descriptive analytics are analytics that characterize, summarize, and organize features and properties of the data to facilitate understanding.
true
Financial statements already contain many of the counts, totals, sums, averages, subtotals, minimums, and maximums that are needed as part of accounting descriptive analytics.
true
Standard cost is an estimated, or expected, cost of producing a good or service used in management accounting.
true
The balance in the cash account is deterministic as compared to being probabilistic.
true
The practice of identifying the difference between a budget amount and actual performance is called:
variance analysis
__________ expresses financial information in relation to some relevant figure or base.
vertical analysis