Data Analytics FINAL

Which type of analytics generally would go first when addressing an accounting issue?

A. Diagnostic analytics
B. Predictive analytics
C. Descriptive analytics
D. Prescriptive analytics

Descriptive analytics

Which measure would help us evaluate what happens in the highest and lowest 20 percent of the data?

A. Quintiles
B. Average
C. Deciles
D. Quartiles

Quintiles

Comparing the extent of long-term debt to equity is an example of __.

A. Horizontal analysis
B. Vertical analysis
C. Ratio analysis
D. Pivottables

Ratio analysis

A diagram showing interrelationships between two or more variables is called a __.

A. Variance analysis
B. graph
C. histogram
D. pivottable

graph

Accountants generally use __ to assess the ultimate collectability of accounts receivables and estimate the allowance for doubtful accounts.

A. Customer profitability
B. Customer credit scores
C. analysis of receivables by customer size
D. aging receivables analysis

aging receivables analysis

__ are brief, generally small, visuals that fit within one cell in Excel that visually depict what happened in the cells next to it.

A. Pivot charts
B. Analytic charts
C. Sparklines
D. Small graphics

Sparklines

The Dupont Analysis measures which of these performance categories?

A. Profitability, Liquidity, and Solvency
B. Activity, Liquidity, and Profitability
C. Profitability, Activity, and Solvency
D. Activity, Liquidity, and Solvency

Profitability, Activity, and Solvency

If the profit margin is 0.1142, asset turnover is 0.5619 and financial leverage is 1.2937, what is the return on equity?

A. 0.7269
B. 0.0642
C. 0.0830
D. 0.1142

0.0830

In vertical analysis, the relevant base for cost of goods sold is which of the following?

A. Total stockholders' equity
B. Sales revenue
C. Total credit sales
D. Total assets

Sales revenue

Descriptive analytics of a return on market equity performed by researchers, __ , provide examples of a possible anomaly right around zero that requires further analysis.

A. Buck and Jordan
B. Deutch and Sensenbrenner
C. Burgstahler and Dichev
D. Davis and Castro

Burgstahier and Dichev

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

A. Horizontal analysis
B. A pivottable
C. Percentage change
D. Vertical analysis

Horizontal analysis

Profit margin is computed as follows:

A. Gross profit / Assets
B. Net profit (net income) / Sales
C. Gross profit / Sales
D. Net profit (net income) / Assets

Net profit (net income) / Sales

The __ provide details on the accounting policies chosen.

A. analyst report
B. financial statements
C. management discussion and analysis section
D. footnotes

footnotes

Descriptive analytics is part of which component of the AMPS model?

A. Share the Story
B. Master the Data
C. Ask the Question
D. Perform the Analysis

Perform the Analysis

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

A. mean
B. maximum or minimum
C. mode
D. standard deviation

Standard deviation

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

A. mean
B. maximum or minimum
C. mode
D. standard deviation

Maximum or minimum

The older the accounts receivable (i.e., longer amount of time it has been outstanding), the _ likely it will be that they will ultimately be collected.

A. more
B. less

Less

The best measure for evaluating firm efficiency in handling and using assets would be _.

A. asset turnover
B. return on assets
C. profit margin
D. return on equity

Asset turnover

A is a graphical depiction of a , which reorganizes and summarizes certain data using cross-tabulations without changing the underlying spreadsheet (or data).

A. pivot chart; pivottable
B. pivottable; pivot chart
C. histogram; pivottable
D. graph; table

Pivot chart; pivottable

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

A. Quintiles
B. Quartiles
C. Average
D. Deciles

Deciles

Which ratio includes a component to evaluate financial leverage?

A. Return on assets
B. Return on equity
C. Return on sales
D. Return on investment

Return on equity

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

A. Profit margin × Asset turnover × Financial leverage
B. Profit margin × Asset turnover
C. Asset turnover × Financial leverage
D. Gross profit margin × Asset turnover × Financial leverage

Profit margin x Asset turnover x Financial leverage

In vertical analysis, the relevant base for interest expense would be which of the following?

A. Sales revenue
B. Total assets
C. Total expenses
D. Total liabilities

Sales revenue

Which would have a higher expected asset turnover (per dollar of assets) than the others?

A. Jewelry
B. Real estate
C. Grocery stores
D. Airline transportation

Grocery Stores

Which would have a higher expected profit margin (per dollar of sales) than the others?

A. Jewelry
B. Shampoo
C. Bananas
D. Clothing

Jewelry

In which of the buckets would you expect the greatest amount of aged receivables to be?

A. 31-60 days
B. 61-90 days
C. 1-30 days
D. 91-120 days

1-30 days

In vertical analysis, the relevant base for accounts receivable would be which of the following?

A. Sales revenue
B. Total assets
C. Total stockholders' equity
D. Total credit sales

Total Assets

To compute the percentage change in a horizontal analysis, the computation is:

A. (New − Old)/Old.
B. (Old − New)/Old.
C. (Old − New)/New.
D. (New − Old)/New.

(New - Old)/Old

The relevant base for the vertical analysis for cost of good sold is _.

A. total cash flows from operating activities
B. total revenues
C. total assets

Total revenues

Burgstahler and Dichev find a potential anomaly around zero when graphing the return on the market value of stockholder's equity. After this descriptive analysis, they are most likely to perform _ analysis.

A. diagnostic
B. horizontal
C. vertical
D. DuPont

Diagnostic

The DuPont ratio is used to summarize and disaggregate the _ ratio.

A. return on equity
B. debt-to-equity
C. inventory turnover
D. earnings per share

Return on equity

In addition to comparing a company to its competitors, the economy as a whole, and companies in the same industry, a company can compare its own _ over the past few years.

A. expenses
B. employees
C. performance

Performance

After seeing a graph of past sales performance, it may be easier to forecast future performance as part of _ analytics.

A. diagnostic
B. descriptive
C. prescriptive
D. predictive

Predictive

Which financial statement reveals the resources available for management to utilize?

A. Statement of Cash Flows
B. Income Statement
C. Balance Sheet
D. Statement of Stockholders' Equity

Balance sheet

Which financial statement reveals the changes in retained earnings?

A. Balance Sheet
B. Statement of Cash Flows
C. Income Statement
D. Statement of Stockholders' Equity

Statement of Stockholder's Equity

All other things equal, in which of the following buckets would you expect the least amount of aged receivables to be?

A. 31-60 days
B. 61-90 days
C. 1-30 days
D. 91-120 days

91-120 days

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.

A. more, more
B. less, more
C. more, less
D. more, equally

More, more

Descriptive quantitative analytic measures of financial statements to help evaluate liquidity, solvency, profitability and efficiency are called __.

A. vertical analysis
B. horizontal analysis
C. ratio analysis
D. pivottables

Ratio analysis

__ expresses financial information in relation to some relevant figure or base.

A. Vertical analysis
B. Horizontal analysis
C. Ratio analysis
D. Pivottables

Vertical analysis

A __ is a display of rectangles with area proportional to the underlying frequency of the data.

A. histogram
B. frequency diagram
C. line chart
D. pie chart

Histogram

Descriptive analytics are characterized by __ of the relevant data.

A. summarization
B. uncovering patterns
C. what-if scenarios
D. cash flow analysis

Summarization

An illustration of the total aged receivables in each 30-day bucket is an example of a __.

A. histogram
B. pivot chart
C. line chart
D. horizontal analysis

Histogram

Asset turnover is computed as follows:

A. Sales / Assets
B. Assets / Sales
C. Net profit (net income) / Assets
D. Gross profit / Assets

Sales/Assets

If the profit margin is 0.1142, asset turnover is 0.5619 and financial leverage is 1.2937, what is the return on asset?

A. 0.0830
B. 0.0642
C. 0.1142
D. 0.7269

0.0642

Which ratio does not include a component to evaluate financial leverage?

A. Return on assets
B. Return on equity
C. Return on sales
D. Return on investment

Return on assets

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

A. Sales revenue
B. Total assets
C. Total equity
D. Total liabilities

Total assets

(T/F) Dupont analysis allows an analysis of profit margins, asset turnover and liquidity.

False

(T/F) 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

(T/F) Descriptive analytics are analytics that characterize, summarize, and organize features and properties of the data to facilitate understanding.

True

(T/F) 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

(T/F) Diagnostic analytics emphasizes "What happened?"

False

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

A. Percentage change
B. Vertical analysis
C. A pivottable
D. Horizontal analysis

A Pivottable

Diagnostic analytics addresses which of the following questions?

A. What happened?
B. Why did it happen?
C. Will it happen in the future?
D. Based on what we expect will happen, how do we optimize?

Why did it happen?

The practice of identifying the difference between a budget amount and actual performance is called:

A. variance analysis
B. management by exception
C. outlier analysis
D. anomaly analysis

Variance analysis

What is an example of a cash reconciling item for an item recorded by the bank but not yet recorded in the general ledger?

A. Interest earned on notes held by the bank
B. Outstanding checks
C. There are no items recorded by the bank but not recorded in the general ledger.
D. Outstanding deposits

Interest earned on notes held by the bank

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 unplanned overtime is required to complete the job?

A. Favorable price variance
B. Unfavorable labor rate variance
C. Favorable labor rate variance
D. Unfavorable price variance

Unfavorable labor rate variance

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 usage of raw materials unexpectedly decreases below the standard quantity used?

A. Unfavorable quantity variance
B. Favorable quantity variance
C. Unfavorable price variance
D. Favorable price variance

Favorable quantity variance

In addition to an aging analysis to establish an allowance for doubtful accounts, a ___ system may be used to assess the ability of customers to pay outstanding receivables.

A. credit analysis
B. customer diagnostic analytics
C. customer relationship management (CRM)
D. supply chain system

Customer relationship management

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

A. management by exception
B. anomaly
C. outlier
D. fuzzy matching

Management by exception

__ looks for underlying patterns in the data by examining the data at a more detailed level in order to examine potential correlations.

A. Drill-down detailed analytics
B. Summarizing data
C. Descriptive analytics
D. Fuzzy matching

Drill-down detailed analytics

Benford's law follows the distribution:

A. log10(d + (1/d)), where d is each digit 1, 2, and so on
B. ln10(d + (1/d)), where d is each digit 1, 2, and so on
C. ln10(1 + (1/d)), where d is each digit 1, 2, and so on
D. log10(1 + (1/d)), where d is each digit 1, 2, and so on

log10(1 + (1/d)), where d is each digit 1, 2, and so on

__ is used to help find customers that might have a similar address or name as employees.

A. Fuzzy matching
B. Sequence check
C. Duplicate testing
D. Benford's law

Fuzzy matching

The test to see if the key number field in a record is in correct ascending or descending order is called a(n) __ check.

A. order
B. compliance
C. sorting
D. sequence

Sequence

The importance of understanding the root cause of an outlier is to

A. All of the items listed.
B. help management understand unfavorable variances.
C. identify potentially fraudulent activity.
D. help management understand favorable variances.

All of the items listed

While Benford's Law mainly applies to the first digit of a number, it can also be applied to:

A. The last two digits
B. The first two digits
C. The second through fourth digits
D. All of the above

All of the above

Analytics of the inventory item that produces the most profit is an example of the diagnostic analytics of __.

A. performing drill-down detailed analytics
B. performing descriptive analytics
C. determining relations/patterns/linkages between variables through statistical analysis
D. identifying anomalies/outliers

Performing drill-down detailed analytics

Analyzing relationships between vendors and A/P clerks to find potentially fraudulent relationships is an example of what type of diagnostic analytics?

A. identifying anomalies and outliers
B. Performing marginal analysis
C. Performing descriptive analytics
D. Finding previously unknown linkages, patterns, or relationships between variables

Finding previously unknown linkages, patterns, or relationships between variables

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

A. Performing descriptive analytics
B. Performing drill-down detailed analytics
C. Identifying anomalies and outliers
D. Performing statistical analyses

Performing descriptive analytics

Diagnostic analysis includes all of the possible types of analytics except for which of the following?

A. Performing marginal analysis
B. Identifying anomalies and outliers
C. Performing drill-down detailed analytics
D. Performing statistical analysis

Performing marginal analysis

Performing a bank reconciliation is example of the diagnostic analytics of __.

A. determining relations/patterns/linkages between variables through statistical analysis
B. performing drill-down detailed analytics
C. performing descriptive analytics
D. identifying anomalies/outliers

Identifying anomalies/outliers

Testing for duplicate transactions is an example of what type of diagnostic analytics?

A. Performing marginal analysis
B. Performing descriptive analytics
C. Finding previously unknown linkages, patterns, or relationships between variables
D. Identifying anomalies and outliers

Identifying anomalies and outliers

Internal controls testing is an example of what type of data analytics?

A. Identifying anomalies and outliers
B. Finding previously unknown linkages, patterns, or relationships between variables
C. Performing marginal analysis
D. Performing descriptive analytics

Identifying anomalies and outliers

Which cash reconciling item could potentially affect either the bank statement or the general ledger?

A. Recording error
B. Interest earned on notes held by the bank
C. Outstanding deposit
D. NSF checks

Recording error

Segregation of duties suggests separating all of the following from each other except:

A. Use of the assets
B. Authorization of the use of the assets
C. Custody of assets
D. Recordkeeping

Use of the assets

Testing using fuzzy matching is an example of which type of diagnostic analytics?

A. Performing descriptive analytics
B. Finding previously unknown linkages, patterns, or relationships between variables
C. Identifying anomalies and outliers
D. Performing marginal analysis

Identifying anomalies and outliers

Commitment to prior investments escalates and makes it harder to abandon prior investments even if it may not make rational sense is called __ .

A. committed cost fallacy
B. sunk cost fallacy
C. commitment cost fallacy
D. cost abandonment fallacy

Sunk cost fallacy

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.

A. greater; different
B. greater; greater
C. smaller; different
D. smaller; smaller

Smaller; different

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?

A. cost of goods sold
B. sales revenue
C. advertising expenses
D. operating expenses

Advertising expenses

If the data analyst hypothesizes that grocery sales are higher on Sunday than on other days, the null hypothesis would likely state that:

A. Grocery sales are lower on Sunday than on other days.
B. Grocery sales are higher on Sunday than on other days.
C. Grocery sales are lower or no different on Sunday than on other days.
D. Grocery sales are higher or no different on Sunday than on other days.

Grocery sales are lower or no different on Sundays than on other days.

According to Benford's law, what is the expectation for the percentage of times that the first digit of a number is a 9?

A. 5.12%
B. 4.58%
C. 5.8%
D. 30.10%

4.58%

What is an example of a cash reconciling item for an item recorded in the general ledger but not yet recorded in the bank statement?

A. Bank service fee
B. Interest earned on notes held by the bank
C. Outstanding checks
D. NSF checks

Outstanding checks

Which cash reconciling item could potentially affect either the bank statement or the general ledger?

A. Error
B. Interest earned on notes held by the bank
C. Outstanding checks
D. NSF checks

Error

Which of the following can potentially find gaps in the check numbers written?

A. Fuzzy matching
B. Test of duplicates
C. Benford's law
D. Sequence check

Sequence check

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

A. outlier/anomaly detection
B. regression
C. drill-down, detailed
D. classification

Drill-down, detailed

The appropriate test to compare one sample to another sample to see if one is greater than another in some way is called a(n) _.

A. regression
B. two-sample t-test of a difference in means
C. one-sample t-test of a difference in means
D. chi-squared test of a difference in means

Two-sample t-test of a difference in means

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

A. regression
B. two-sample t-test of a difference in means
C. one-sample t-test of a difference in means
D. chi-squared test of a difference in means

Regression

_ is used to help find vendors that might have a similar address as an employee.

A. Duplicate testing
B. Sequence check
C. Benford's law
D. Fuzzy matching

Fuzzy matching

In fuzzy matching, if an exact match (tolerance = 100%) is required, what is the likely consequence for finding potential matches?

A. Too many potential matches
B. Only exactly matches, no potential matches
C. Good mix between exact and potential matches

Only exactly matches, no potential matches

Where would the company likely get data comparing the salaries of female executives to the salaries of male executives?

A. Customer relationship management system
B. Accounting system
C. Human resources system
D. Supply chain system

Human resourcces system

According to Benford's law, which one of these first digits have a higher probability of occurrence than the first digit 3?

A. 9
B. 7
C. 4
D. 2

2

When is Benford's law analysis not useful?

A. Assets only recorded above a certain threshold
B. Cash disbursements
C. Earnings per share
D. Large datasets

Assets only recorded above a certain threshold

Analysis of the customer that owes the most would be an example of the diagnostic analytics of _.

A. performing drill-down detailed analytics
B. determining relations/patterns/linkages between variables through
C. statistical analysis
D. identifying anomalies/outliers

Performing drill-down detailed analytics

Evaluating the relationship between sales and advertising expense would be an example of the diagnostic analytics of _.

A. performing drill-down detailed analytics
B. determining relations/patterns/linkages between variables through statistical analysis
C. identifying anomalies/outliers

Determining relations/patterns/linkages between variables through statistical analysis

Computing and evaluating price and quantity variances would be an example of the diagnostic analytics of _.

A. performing drill-down detailed analytics
B. determining relations/patterns/linkages between variables through statistical analysis
C. identifying anomalies/outliers

Identifying anomalies/outliers

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 increases?

A. Unfavorable price variance
B. Favorable price variance
C. Unfavorable quantity variance
D. Favorable quantity variance

Unfavorable price variance

Which type of analysis would predictive analytics not be useful?

A. Regression
B. Time series analysis
C. Classification
D. Finding anomalies and outliers

Finding anomalies and outliers

Predicting which companies are likely to have misstated financial statements is an example of __ in predictive analytics.

A. regression
B. prediction
C. classification
D. time series analysis

Classification

If a company has an Altman Z-score of 1.7, the company would be classified in the __.

A. safe zone, not currently at risk of bankruptcy
B. gray zone, or at risk of bankruptcy
C. green zone, no risk of bankruptcy
D. distress zone, or at significant risk of bankruptcy

distress zone, or at significant risk of bankruptcy

If a company has an Altman Z-score of 3.1, the company would be classified in the __.

A. green zone, no risk of bankruptcy
B. gray zone, or at risk of bankruptcy
C. distress zone, or at significant risk of bankruptcy
D. safe zone, not currently at risk of bankruptcy

Safe zone, not currently at risk of bankruptcy

Which predictive analytics technique would be used to predict the interest rate given from a lender (bank) to a borrower?

A. Regression
B. Looking for anomalies and outliers
C. Time-series analysis
D. Cross-tabulation

Regression