Which Statement Is Not True About Principal Components Analysis (PCA)

question 49

Multiple Choice

Which statement is not true about principal components analysis (PCA) ?

• A)The factors are estimated based only on the common variance.
• B)The total variance in the data is considered.
• C)PCA is recommended when the primary concern is to determine the minimum number of factors that will account for maximum variance in the data for use in subsequent multivariate analysis.
• D)The diagonal of the correlation matrix consist of unities.

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Definitions:

Perpetual Inventory System

A method of accounting for inventory where transactions are recorded in real-time, allowing for continuous tracking of inventory levels.

Gross Method

An accounting approach where discounts for early payment are not considered until they are actually taken by the customer.

Merchandise

Goods that are purchased for resale to customers in the normal course of business operations.

Inventory Shrinkage

The loss of products between purchase from suppliers and sale to customers, often due to theft, damage, or clerical errors.