Solutions Manual for Accounting Information

Systems 2nd by Donna Kay 0132991322

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Solutions Manual for Accounting Information Systems 2nd by Donna Kay 0132991322

Active Review
9.1 Refer to the chapter opener, Meet Charlie Hoffman. XBRL is being used around the globe for digital
business and financial reporting purposes. In your opinion, why is XBRL becoming globally accepted for
financial reporting?

XBRL makes the flow of financial and business reporting data more transparent and efficient.
The traditional financial reports are presented in formats like Adobe PDF, MS Word, MS Excel files.
These formats are proprietary and difficult to consistently extract financial data hidden in financial
statements.

But XBRL financial reports are Internet-based and they can be viewed on common browsers on any
computer system. XBRL will also reduces data entry errors and encourages more analysis of accounting
reports

9.2 XBRL standardizes financial reports. Discuss why standardization of business and financial reports is
important in today’s global economy.

Standardization of financial reporting reduces complexity, provides greater transparency, increases

comparability, and improves efficiency.

9.3 Discuss the impact of XBRL on business intelligence applications.

XBRL allows financial analyst and investors to perform data analysis without rekeying data. Also, since
XBRL has a standard format, business intelligence data mining tools could scan financial data more
efficiently and provide more accurate results.

9.4 Why are there different taxonomies? Why can’t one taxonomy be used for all reporting?

There are many organizations requiring different types of financial reports, for example, US Mutual Fund
Risk/Return, US Record of Credit Ratings, and US GAAP. Each organization has developed a series of
taxonomies for types of reports that are required.

9.5 Can companies reduce costs by using XBRL for reporting? How?

Using XBRL could reduce cost by reducing data rekeying, reducing errors, increasing timeliness, and
improving data quality.

9.6 Discuss how organizations can benefit from XBRL.

The use of XBRL for financial reporting permits the SEC to review a greater number of filings, faster and
in greater detail. The financial analysts and investors who use the financial reports can conduct financial
analysis faster and with greater accuracy. Banking regulators in the United States and Europe have also
found XBRL to be useful in standardizing and streamlining their work. The U.S. Federal Deposit Insurance
Corporation (FDIC) is using XBRL to process filings by some banks.

9.7 Discuss how XBRL addresses transparency, quality, and timeliness issues.
• Transparency is achieved because financial data users are able to quickly find and understand
financial information about companies’ performance.
• Quality is achieved because XBRL data is keyed only once and IT provides varying levels of
validation.
• Timeliness is increased because data flow from the business system to the financial system is fully
automated. Employees doesn’t need to manually feed data into the financial system.

9.8 Explain how XBRL reduces rekeying data.

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XBRL Integrated tagging technique tags data during the information processing stage. This automates data
transfer from various business processes to the financial reporting system. By tagging data during
processing, the data becomes interchangeable between systems, programs, and platforms. See silo
architecture in chapter 6.

9.9 What is metadata? Explain how XBRL uses metadata.

Meta data means data (information) about the data. XBRL tagging like other web development
programming languages provides information about the pieces of data stored in financial reports. For
example, a number can represent year, money amount, or age. By adding proper tags to it, the meaning of
data is stored with data.

9.10 Why is knowledge of XBRL important to accounting professionals? Explain.

American Accounting Association encourages accounting programs to introduce XBRL in their curriculum
for the extensive use of XBRL in financial reporting and analysis. In recent years XBRL became the
accounting language. XBRL files include accounting standards and terminologies. XBRL became the
means of communicating financial data.

Key Terms Check

9.11 Match the above following terms and definitions.
a. eXtensible Business Reporting Language g 1. Defines elements related to a particular taxonomy
(XBRL) f 2. Used to identify data and metadata
b. metadata i 3. A document that contains specific amounts for a taxonomy at
c. XBRL integrated tagging one instance
d. XBRL bolt-on tagging e 4. Similar to a dictionary that defines XBRL tags for specific
e. taxonomy data items
f. elements a 5. Digital financial reporting that electronically tags financial
g. schema information
h. XBRL linkbases d 6. Adds data tags after reports are created
i. instance document c 7. Adds data tags during information processing
b 8. Data about data
h 9. Defines relationships between data

9.12 Match the following terms and definitions.

a. data element e 1. Defines the company
b. context element a 2. Numeric or nonnumeric facts
c. unit element d 3. Defines the time period
d. period element f 4. Unique identifier, such as account number
e. entity element b 5. Explains the context in which the data appears
f. identifier element c 6. Defines the unit of measure, such as U.S. dollars

9.13 Match the following terms and definitions.

a. definition links d 1. Defines the labels used in the document

b. calculation links b 2. Defines basic validation rules, such as assets equal
c. presentation links liabilities plus equity
d. label links e 3. Defines the relationships between the elements and
e. reference links the external standards
a 4. Defines different kinds of relationships between
elements
c 5. Defines how elements are presented
Practice Test
9.14 Which of the following is false?
a. XBRL is used for digital financial reporting around the glob
b. XBRL is an extension of XML
c. XBRL is a programming language that is used for writing accounting software (Correct
answer)
d. XBRL provides the metadata capability.

9.15 What was XBRL developed to standardize and streamline?

a. Accounting software
b. Operational database
c. Decision making
d. Financial and business reporting (Correct answer)

9.16 What is metadata?

a. Data about data (Correct answer)
b. Secondary data
c. Data extracted from database
d. Virtual data

9.17 ___________tagging adds XBRL data tags after reports are created.
a. Built-in
b. Integrated
c. Quick-tag
d. Bolt-on (Correct answer)

9.18 ___________tagging adds XBRL data tags as information is processed.

a. Integrated (Correct answer)
b. Information
c. Process
d. Bolt-on

9.19 XBRL tags are similar to

a. A driver’s license
b. A barcode (Correct answer)
c. A house address
d. All the above

9.20 Which of the following is NOT an XBRL essential?

a. Taxonomy
b. Integrated tagging (Correct answer)
c. Schema
d. Instance document

9.21 Which of the following provides the most capability for sharing data between applications?
a. Spreadsheet
b. HTML
 c. Text file
d. XBRL (Correct answer)

9.22 Which of the XBRL essentials is like a dictionary?

a. Taxonomy (Correct answer)
b. Instance document
c. Element
d. Schema

9.23 Which of the following is needed to create an XBRL instance document?

a. Data and XBRL tags
b. XBRL Schema and data elements
c. XBRL taxonomy and data (Correct answer)
d. XBRL programming language and data

Exercises
Short Exercises
9.24 Compare and contrast adding XBRL tags at the end of the financial reporting process (bolt-on
tagging) versus during information processing (integrated tagging). Use the following organizer for your
answer. (Q9.5)

Compare (Same) and Contrast (Different)

Both create XBRL reports Different approach
Both use the same taxonomy and tagging Tags are inserted at the different time.
Both provide transparency The integrated tagging provide better
quality and timeliness
The integrated tagging in the long run
reduces costs but cost more to
implement

9.25 List the five different types of linkbases and describe the function of each. (Q9.6)
See linkbase section in this chapter, page 562.

9.26 Review the XBRL programming code shown in Figure 9.1. Answer the following questions: (Q9.6)
1. What taxonomy is being used? IFRS-gp: AssetsHeldSales
2. What currency is used? Euros
3. How many decimal places will be displayed in the report? None

9.27 Can a relational database be used to store XBRL metadata? Explain your answer. What other options
are organizations using to store XBRL metadata in a database? (Q9.5)

A conventional relational database can store data but not metadata. An XBRL database can store both the
data and the metadata. The data stored in an XBRL database is stored with its metadata, such as data about
the time period, account, currency, and so on. If an XBRL database is used, then XBRL tags can be added
before the data is stored in the database.

It’s Your Call

9.28 You have been called in as an XBRL consultant. The president of the company has asked for your
opinion regarding the costs and benefits of XBRL. What would you say? What benefits of XBRL do you
see as the most important? What costs should an organization consider? (Q9.4)

You could state many benefits of XBRL including transparency, quality, and timeliness. You should also
explain the advantages and disadvantages of the bolt-on and the integrated tagging techniques.
The cost associated with XBRL reporting could include the cost of the implementation of XBRL reporting
system.

9.29 At lunch one day, the topic of XBRL is mentioned. One of your colleagues says, “It has something to
do with schemas, linkbases, and taxonomies—that is all I know.” Then he turns to you and asks, “What do
you know about XBRL?” What would you say? How would you explain the relationship of schemas,
linkbases, and taxonomies? (Q9.6)

Here is what you could say:

There are many different XBRL taxonomies. A taxonomy identifies the type of report and the organization
that issued the taxonomy. An example of an organization could be the U.S. GAAP and an example of a
report type could be inventories. Each taxonomy contains one or more schemas. A schema identifies which
elements are associated with the taxonomy. XBRL taxonomy also contains one or more linkbases. XBRL
linkbases define relationships between data used in an XBRL report. For example, the definition links
define different kinds of relationships between elements. For example, ZIP code is the postal code used in
the United States.

9.30 You are serving as a liaison between accounting and IT. Your company is required to use XBRL for
external financial reporting. IT would like to use XBRL integrated tagging and has asked for funding for an
XBRL database. The accounting department doesn’t see why IT needs funding for another new database.
What are the benefits of XBRL integrated tagging for internal use? Why would IT need a new XBRL
database? What would you say at your meeting with accounting and IT? (Q9.5, 9.6)

You could prepare a presentation on the benefits of XBRL and the benefits of integrated tagging over bolt-
on tagging to your organization in general and accounting department in particular.
The integrated tagging benefits to organization include:
• The reporting cost is reduced.
• Speed of generating XBRL reports is increased
• More accurate intelligent internal reports are created.

9.31
Mark, chief financial officer (CFO) of iElectronics, and Brittany, chief information officer (CIO), would
like to take advantage of XBRL technology for their company financial and accounting functions. They are
both agreed that the company has several financial reporting problems. They prepared the following list of
problems:
• The Security and Exchange Commission (SEC) reports have been late for the last two years.
• Their international subsidiaries, in Canada and Mexico have been late sending their monthly
closing information to the company’s headquarter in Saint Louis Missouri.
• Their internal reports regarding key performance indicators (KPI) are also late and sometime
inaccurate.
• Company’s reported financial data are not detailed enough for the company’s analysts.

IT department programmers have been able to use XML to help the financial department but the result
is not satisfactory.

You have learned about XBRL in your accounting information course and recently attended in a XBRL
workshop. Mark and Brittany are very excited to learn about the XBRL possibilities for helping
iElectronics. In the last Friday meeting, Brittany asked “So, what is XBRL and how could it help us?” After
a brief explanation, you added that XBRL uses XML data tags plus some additional tags to describe
financial statements. You assured them that the XBRL could solve company’s reporting problems.
“How is that possible?" asked Mark. You responded that you would be more than happy to prepare a
presentation for next meeting, providing more information about XBRL and explain how it could provide
assistance to the iElectronics reporting and financial data exchange. "Ok, this sounds great,” responded
Mark. Brittany asked you to include in your presentation the following topics.
a. What is XBRL?
b. How does it relate to XML?
c. What are integrated and Bolt-on tagging?
d. How does XBRL could solve the listed problems?
e. What are the advantages to iElectronics for adapting XBRL?

Prepare a summary that includes answers to the Brittany’s questions. (Q9.1, 9.2, 9.3, 9.4, 9.5)

You can use this chapter information to prepare your presentation. Regarding the last question (i.e. What
are the advantages to iElectronics for adopting XBRL?), you can focus your presentation on:
• Environmental factors – for example, industry characteristics (such as level competition) and
trading partners (such as pressure from vendors)
• Organization structure factors – for example, organization resources.
• Technological factors – for example, the level of technology used in the organization.

Tech in Practice
Tech Exercises
9.32
Tech Tool: Spreadsheet Software Valencia Orange Inc. has asked for your assistance in adding XBRL tags
to its financial statements.
1. Download the data file for this exercise.
2. Use the information in Figure 9.12 to write the XBRL tags for the following selected items on
Valencia Orange’s statement of financial position at August 31, 2011.
a. Short-term borrowings $31.5 million

<us-gaap:ShortTermBorrowings contextRef="ctx21" unitRef="USD" decimals="-

6">31500000</us-gaap:ShortTermBorrowings>

b. Accounts payable $252.5 million

<us-gaap:AccountsPayable contextRef="ctx21" unitRef="USD" decimals="-

6">252500000</us-gaap:AccountsPayable>

c. Accrued liabilities $612 million

<us-gaap:AccruedLiabilities contextRef="ctx21" unitRef="USD" decimals="-

6">612000000</us-gaap:AccruedLiabilities>

d. Customer deposits current $1,458.5 million

<us-gaap:CustomerDepositsCurrent contextRef="ctx21" unitRef="USD" decimals="-

6">1458500000</us-gaap:CustomerDepositsCurrent>

See Tech Ex 9.32 Data File in the Chapter 9 Exercises Solutions.

9.33
Tech Tool: Spreadsheet Software
Valencia Orange Inc. has asked for your assistance in adding some XBRL tags to its financial statements.
 1. Download the data file for this exercise.
2. Use the information in Figure 9.12 to write the XBRL tags for the following selected items on
Valencia Orange’s statement of financial position at August 31, 2011.
a. Long-term debt noncurrent $4,172.5 million

<us-gaap:LongTermDebtNoncurrent contextRef="ctx21" unitRef="USD" decimals="-

6">4172500000</us-gaap:LongTermDebtNoncurrent>

b. Other liabilities noncurrent $391.5 million

<us-gaap:OtherLiabilitiesNoncurrent contextRef="ctx21" unitRef="USD" decimals="-

6">391500000</us-gaap:OtherLiabilitiesNoncurrent>
c. Commitments and contingencies $0

<us-gaap:CommitmentsAndContingencies contextRef="ctx21" unitRef="USD"

decimals="-6">0</us-gaap:CommitmentsAndContingencies>

d. Common stock $3 million

<us-gaap:CommonStockValue contextRef="ctx21" unitRef="USD" decimals="-

6">3000000</us-gaap:CommonStockValue>

See Tech Ex 9.33 Data File in Chapter 9 Exercises Solutions.

9.34
Tech Tool: Spreadsheet Software
Valencia Orange Inc. has asked for your assistance with XBRL tags for its financial statements.
1. Download the data file for this exercise.
2. Use the information in Figure 9.12 to answer the following questions about XBRL tags for the
selected items on Valencia Orange’s statement of financial position at August 31, 2011.
a. What account and amount should appear on the financial statement for the XBRL tag
labeled 2a in the spreadsheet data file for this exercise?

Current Asset $1,028,000,000

b. What account and amount should appear on the financial statement for the XBRL tag
labeled 2b in the spreadsheet data file for this exercise?

Current Long-Term Debt $444,000,000

c. What account and amount should appear on the financial statement for the XBRL tag
labeled 2c in the spreadsheet data file for this exercise?

Current Liabilities $2,916,000,000

d. What account and amount should appear on the financial statement for the XBRL tag
labeled 2d in the spreadsheet data file for this exercise?

Treasury Stock Value $1,148,000,000

See Tech Ex 9.34 Data File and Tech Ex 9.34 SOLUTION (PDF format) in Chapter 9 Exercises Solutions.

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Solutions Manual for Accounting Information Systems 2nd by Donna Kay 0132991322

9.35 As an accounting intern, you have been asked by your supervisor to research software that can be
used for XBRL bolt-on tagging. Go online and search for software that can be used for this purpose. Write
a brief email to your supervisor with a summary of your findings.

Most available XBRL software provides bolt-on tagging. They just transform financial data on a
spreadsheet into an XBRL tagging. For integrated tagging, financial data is transformed at the moment of
capture and stored with its definition in an XBRL database.

9.36 You have been assigned to the XBRL project team for your company. Your assignment is to research
available taxonomies. Go online and research the different taxonomies available. Write a brief email to
your project team summarizing your findings.

You could find taxonomies on the GAAP, IFRS, and GRI home pages.
There are also many sites available on XBRL taxonomy.

9.37 XBRL stands for eXtensible Business Reporting Language. Your boss wants to know why. Go online
and search for an explanation as to why it is called extensible. Write a brief email to your boss with your
explanation.

XBRL programming language syntax is based on XML. In your email, you can start with XML capabilities
as a web-based interactive programming language and then define additional capabilities offered by XBRL.

Technology Projects
Technology Project 9
Tech Tool: Internet
Software Video: Internet Research
iSportDesign is considering implementing XBRL for business reports. Nick, the owner, has asked for your
assistance. He wants you to research the two options for XBRL: bolt-on tagging and integrated tagging.

Go online and research the XBRL software products available for each option. Prepare an executive
summary for Nick with your recommendation and rationale.
Your deliverable for the project is as follows:
Deliverable 1. An executive summary regarding, which XBRL option and software is the best fit for
iSportDesign.

Visit www.pearsonhighered.com/kay to do the following:

1. Download Technology Project 9 instructions.
2. Download files provided online for your convenience in completing the project deliverables.
3. Watch the video with software instructions to complete this project at
www.pearsonhighered.com/kay.

See Project Chapter 9 file in the Chapter 9 Exercises Solutions.

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