CHAPTER 10 SOURCES OF DATA Flashcards
what is primary and secondary data
Primary data is obtained directly from first-hand sources by means of surveys, observation or experimentation. It is data that has not been previously published and is derived from a new or original research study and collected at the source such as in marketing. Primary data is any data which is used solely for the purpose for which it was originally collected.
Secondary data is data that has been previously collected or researched. Sources of secondary data include the internet, libraries, company reports, newspaper, governments and banks. The data collected is useful as it allows the researcher to see the other opinions on their area of study but care must be taken that the data is reliable and accurate. Secondary data is data that has already been collected for some other purpose but can also be used for the purpose in hand.
An important distinction is made here since information collected for one purpose by a business and then, at a later date, used again for another purpose would no longer be primary data.
what are the disadvantages of using secondary data
The data has been collected by someone else. There is no control over how it was collected. If a survey was used, was a suitable questionnaire used? Was a large enough sample taken (was enough data collected)? Was it a reputable organisation that carried out the data collection?
Is the data up to date? Data quickly becomes out of date, for example, people’s consumer tastes change and prices may fluctuate.
The data may be incomplete. Certain groups of people are sometimes omitted from the published data. For example, do you know which groups are included in the unemployment figures?
What is the data? Is it actual, seasonally adjusted, estimated or a projection?
The reason for collecting the data may be unknown. Statistics published on motor cars may include or exclude three wheeled cars, vans and motor caravans. Readers need to know which categories are included in the data.
what is nominal data
Nominal data is data that is used for naming or labelling variables, without any quantitative value. There is usually no intrinsic ordering to nominal data. Examples include blood type, gender, eye colour and race.
what is ordinal data
Ordinal data is a data type with a set order or scale to it. However, this order does not have a standard scale on which the difference in variables in each scale is measured. Examples include customer satisfaction survey results, happiness levels, the Likert scale and age groups.
Nominal level data can only be classified, while ordinal data can be classified and ordered.
what is discrete data
Discrete data is non-continuous data. Discrete data can only take certain values for example the number of students taking a course (there cannot be half a student). Discrete data is counted.
what is continuous data
Continuous data is unbroken data that has no gaps. Continuous data can take on any value (within a range) for example time or distance. Continuous data is measured.
what is descriptive analysis
A descriptive analysis gives you an idea of the distribution of the data, helps you detect anomalies and enables you identify relationships between variables. Examples include histograms, frequency tables, bar charts, and the calculation of mean, mode, median and standard deviation
what is inferential analysis
Inferential analysis uses a random sample of data taken from a population to describe and make inferences about the population.
Descriptive analysis summarises the characteristics of a data set. Inferential analysis allows you to test a hypothesis.
what is machine/sensor data
Sensor data is the output from a device that detects and responds to some type of input from the physical environment.
This kind of data is collected in real-time and the number and timing of observations can be adapted to suit the requirements. Machine/sensor data can be collected automatically or manually. The quality is dependent on the level of sophistication of the sensor to take accurate measurements.
Sensor data can range from measurements taken from robots on production lines, to location data from a mobile phone, to smart meters recording electrical or gas usage in homes.
what is transactional data
Transactional data relates to the transactions that take place as an organisation conducts its business.
Large retailers generate large volumes of data on a regular basis, particularly transactional data. Each transaction consists of one or more items of data, for example product IDs, prices, payment information. The quality of data produced from business transactions is related to the ability to gather representative observations and to process them in an appropriate manner.
Examples of transactional data include purchases by a customer, invoices raised, payments made, stock market prices.
what is human/social data
Social data is information that social media users share publicly.
Social media, such as Facebook, Instagram and Twitter, can be used by companies to gain information on users’ behaviour. Social media networks analyse the data to learn more about the users and connect them with appropriate content and advertising relevant to their interests.
Examples include posts on Facebook, tweets from Twitter and photos on Instagram.
what is the accounting system as an internal source of information
The accounting system will collect data from source documents such as invoices, timesheets and journal entries. The data will be sorted and analysed by a coding system by type of expense, department, manager and job. Reports of direct and indirect costs compared to budgets may be produced at regular intervals to help managers plan and control costs. Ad hoc reports may be produced to help managers make specific decisions.
Consider the examples listed below:
Sales analysed by product will help management to assess the patterns of demand for each product.
This same information will help plan production and inventory levels.
what is the payroll system
The payroll system may provide information concerning detailed labour costs. Hours paid may be analysed into productive and non-productive time such as training, sick leave, holiday and idle time. Labour turnover by department or manager may be analysed and may help management to assess the employment and motivation policies.
what is a strategic planning system
The strategic planning system may provide information relating to the organisation’s objectives and targets. Assumptions relating to the external environment may be detailed. Details of the organisation’s capital investment programme and product launch programme may also be recorded here. Some of this information will be commercially sensitive and only accessed by senior managers in the organisation.
what are the benefits and limitations of internal sources of information
benefits
readily available data
data can be easily sorted and analysed
reports can easily be produced when required
data relates to the organisation concerned
limitations
data may need to be further analysed to be of use to management accountants
what is environmental scanning/monitoring
Businesses are finding it increasingly difficult to succeed if they ignore the external environment which will influence their activities. The process known as environmental scanning or environmental monitoring is becoming an increasingly important part of the role of the management accountant. These terms are used to describe the process whereby data is collected from outside, as well as from inside the organisation and used in the decision-making process.
what are the main sources of external information
government sources
business contacts – customers and suppliers
trade associations and trade journals
the financial and business press and other media
the internet.
how are government used as an external source of information
There is a wealth of published statistical data covering many aspects of the nation’s economy: population, manpower, trade, agriculture, price levels, capital issues and similar matters. Most of this is produced by national governments.
The primary purpose of this data is to provide information for economic planning at the national level – macroeconomics. The data serves a secondary purpose of providing industry with useful back ground information for deciding on future policies such as raising finance. The data is published in general terms for a type of industry or geographical area but is not company specific.
