Robin Inc Feared That the Average Company Loss Is Running Beyond

question 14

Multiple Choice

Robin Inc. feared that the average company loss is running beyond $34,000. It initially conducted a hypothesis test on a sample extracted from its database. The hypothesis was formulated as H0: average company loss $34,000 vs. H1: average company loss > $34,000. The test resulted in favor of Robin Inc.'s loss not exceeding $34,000. Detailed study of company accounts later revealed that the average company loss had run up to $37,896. Which of the following errors were made during the hypothesis test?

• A) Type III error
• B) Type II error
• C) Type I error
• D) Type IV error

---

Definitions:

Bonds at Discount

Bonds issued below their face value, where the difference between the issue price and the face value represents the interest.

Journal Entry

A record in the accounting journal that represents a single transaction and shows the debits and credits to the various accounts affected by the transaction.

Quoted Price

The existing rate at which an asset or service can be sold or purchased.

Selling Price

The amount of money for which a product or service is sold to customers.