Which of the Following Statements Is Incorrect

question 22

Multiple Choice

Which of the following statements is incorrect?

• A) While linear probability models divide firms into high or low bankruptcy risk classes, logit models and linear discriminant models produce a value for the expected probability of bankruptcy.
• B) The logit model overcomes a weakness of the linear probability model by restricting the estimated range of bankruptcy probabilities to lie between 0 and 1.
• C) All three credit scoring models use past data, such as financial ratios, as inputs to explain repayment experiences on old debt.
• D) All of the statements are correct.

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Definitions:

Work In Process

Inventory that is in the production process but not yet completed; reflects goods that are being manufactured but aren't finished products.

Average Costing

An inventory costing method where goods are priced based on the average cost of all similar items in inventory, suitable for homogeneous products.

FIFO

An acronym for "First In, First Out," a method used in inventory management and accounting where the oldest inventory items are recorded as sold first.

Unit Costs

The expense associated with manufacturing, storing, or acquiring a single unit of a good or service.