For those of you who are new to taxonomy and business reporting, you might find yourselves wondering what is XBRL. It is a legitimate question to ask because the concept is all quite confusing. Therefore, to know the answer to your question, what is XBRL and what is the full form of XBRL, it is important that you keep reading this article.
What is XBRL?
When you are getting started with the business world, one new concept that you would have to learn is reporting. You have to make computerized financial statements and submit them to the securities and exchange commission also known as SEC. To make these reports people would have to use HTML or other softwares to make the data in the reports visible. However now this is where XBRL comes into play. XBRL stands for extensible business reporting language.
Now again your question still stands that what is xbrl or now that you know the full form. It is a programming language in which the person takes all the information about the business in human readable form and extensible business reporting language converts it into machine readable format.
The advantage of this is that this makes all the data easily available to the public sectors and the managing authorities. This makes the data in the reports properly structured and gives all the data a proper format.
Advantage of XBRL
One of the main advantages of extensible business reporting language is that it makes it very easy to share data among the managers, the public sector and the private sector, different parts of the same company and also the shareholders and the other stakeholders. Now after answering your question about what is xbrl (extensible business reporting language), you might have another question.
This extensible business reporting language (XBRL) converts data into machine readable form so how is it beneficial to convey actual information that could be interpreted by humans. extensible business reporting language (XBRL) comes with its own format that is embedded into the language system so when the user enters information, at that time the data is converted into machine readable form. But when someone demands the information, then the inline built in format comes into play. This format converts the machine readable format into human reading format and can easily use HTML to display this.
This means that even though the old method of using html for report transfer has not completely become obsolete, the concept has evolved as HTML has become more compatible with XBRL (extensible business reporting language).
XBRL (extensible business reporting language) makes it more easier , transparent, and economical to cross examine the information of different companies. It utilizes much less time than traditional methods of search and analyzing a company’s information. Moreover it makes it easier to store large amounts of data by converting it into machine readable form.
Tagging In XBRL (Extensible Business Reporting Language)
Another famous concept involved when it comes to studying the extensible business reporting language is tagging in XBRL. When a person is creating a report using the extensible business reporting language, then along with all of the financial statements he has to include every thing from his company.
From all tables of data, the databases, the money in and out and money transfers, to every change in financial policy, everything has to be given a specific number with which it can be referred with. This methodology of assigning references to every element in the report is called tagging in XBRL. Tagging in XBRL (extensible business reporting language) incorporates afield called taxonomy to effectively classify all the tags Tagging in XBRL makes the whole business system seem transparent because if someone wants to research on a company or on a certain part of the company then he can find all the relevant material just by using these reference numbers. These make it very easy to locate information and to properly organize and structure it into one place.
The SEC analyzes the companies and their trends by looking at their financial statements and cross examining the references of its elements. Since tagging in XBRL makes it much easier to access the information. It can be categorically stored and reused in other systems, in making the laws and enforcing them along with more backup for further rule making.
What is taxonomy?
A methodology that is mostly talked about when it comes to tagging in extensible business reporting language is taxonomy. Taxonomy is the branch or a field which is used to name or classify objects according to their attributes or due to having similar characteristics. In the terms of extensible business reporting language, taxonomy means to characterize certain tags of financial statements and other elements in a report and convert them into machine readable format.
Taxonomy can help identify each element separately and what it does and also it can help to link the elements with other elements in the report. It consists of XML and XSD files which convert data into machine readable format either to be used with excel or html depending on the type and contents of the report.
Extensible business reporting language (XBRL) is a computer language that makes the process of report management and filing many times easier. This methodology also includes tagging which gives a reference to every element of the report.this ensures that the company is really transparent and all information is available for further analysis of the report. Extensible business reporting language makes it much easier, hassle free and economic to research about a company rather than reverting to traditional methods which unfortunately cost more financially and consume a lot of time. Therefore, extensible business reporting language, XBRL is the best language to work with report making and filing.
Read more interesting articles at Organised Everyday