Theory of Types and Parts

Years ago I posed a hypothesis that financial statement line items had logical types and parts.  After significant testing, between 2015 and about 2018, I have reached the conclusion that my hypothesis was correct and now I have my theory of types and parts.

It is worth mentioning that others us different terminology to describe the same sorts of things as what I call "types and parts".  Those other terms include "wider-narrower" relations, "general-special" relations, "class-subclass" relations, "has-part" relations, "whole-part" relations, "part-of" relations, "broader-narrower" relations.  Also used to discuss types and  parts is the notion of "anchoring".

Here are many of the best details related to my testing, poking, and prodding and prototypes that I constructed to test my hypothesis:

Effectively, a financial report is a knowledge graph. A portion of that knowledge is information about the line items and the subcomponents of a line item.  Below is a graph of the things and types and parts of the common elements of financial statements using the four statement model: (click here for larger image)


Obviously a real financial statement would be significantly larger than the above prototype.  Here is another prototype but for a significantly larger financial report.

When the creator of an XBRL-based report model creates an extension; that extension must fit within the knowledge graph of the report and the base reporting scheme supporting that report model.

A simple example of how types and parts work can be seen from the small example below: (the hierarchy shows types/parts)
  • Thing
    • Net Income (Loss)
      • Revenues
      • Expenses
      • Gains
      • Losses
    • Net Cash Flow
      • Net Cash Flow Operating
      • Net Cash Flow Investing
      • Net Cash Flow Financing
In simple terms, the hierarchy above is stating that "Losses" is part of "Net Income (Loss)" and that "Net Cash Flow Financing" is part of "Net Cash Flow". Basically,  report line items need to be used appropriately relative to other report line items.  Further, if an extension concept is created then that concept needs to be placed into the hierarchy appropriately so that the user of the information can sort out the knowledge graph effectively.

Similar to types is parts.  An assembly is a set of parts that make up that assembly.  For more information see Atomic Design Methodology.

Additional Information:

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