XBRL definition
/What is XBRL?
XBRL is a contraction of the term eXtensible Business Reporting Language. XBRL uses tags to specifically identify various types of information within a financial report, which are then used by software to convert the data into an electronic spreadsheet for further analysis. Thus, XBRL is a step in the process of converting plain-text financial information into a spreadsheet format for further analysis. XBRL is required for the financial reports filed with the Securities and Exchange Commission, which means that it must be used by publicly-held companies in their public report filings.
XBRL Taxonomies
XBRL incorporates a set of definitions, referred to as taxonomies, that summarize the meanings in the terms used in a financial report. These taxonomies have been developed by regulators and the parties setting accounting standards. For example, the tag “ProfitLoss” can be assigned to the reported net earnings of a business, while “CostofGoods” could be assigned to its reported cost of goods sold.
This concept can be expanded upon by anyone who uses XBRL-tagged reports, in order to extract additional information from the reports.
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FAQs
Are There Risks Associated with XBRL Reporting?
XBRL reporting carries risks such as incorrect tagging, which can misrepresent financial data and mislead users. Using outdated taxonomies or incompatible software may lead to filing errors or regulatory penalties. Additionally, the complexity of XBRL standards requires adequate training and quality controls to ensure accuracy and compliance.