How does reference data generally compare to master data?

How does reference data generally compare to master data?

• A. More volatile and complex
• B. Less volatile and less complex
• C. Similar in transaction volume
• D. More extensive and detailed

Answer: (B)

Reference data is typically characterized by its stability and simplicity compared to master data. This type of data usually consists of categorical values used to classify or contextualize other data elements, such as country codes, currency codes, or product categories. Because reference data serves primarily as a lookup for the classification of other data, it does not frequently change, making it less volatile. In contrast, master data encompasses the critical entities in a business—like customers, products, and vendors—that may be more dynamic and subject to changes over time as businesses evolve and expand. Master data usually requires more comprehensive management practices to maintain its accuracy and consistency across various systems due to this inherent complexity. Thus, the correct choice emphasizes the lower volatility and complexity of reference data when compared to master data, illustrating the fundamental characteristics that differentiate these two types of data in data management practices.

Reference data is typically characterized by its stability and simplicity compared to master data. This type of data usually consists of categorical values used to classify or contextualize other data elements, such as country codes, currency codes, or product categories. Because reference data serves primarily as a lookup for the classification of other data, it does not frequently change, making it less volatile.

In contrast, master data encompasses the critical entities in a business—like customers, products, and vendors—that may be more dynamic and subject to changes over time as businesses evolve and expand. Master data usually requires more comprehensive management practices to maintain its accuracy and consistency across various systems due to this inherent complexity.

Thus, the correct choice emphasizes the lower volatility and complexity of reference data when compared to master data, illustrating the fundamental characteristics that differentiate these two types of data in data management practices.