In Entering the Billing Address for a New Client in Emil

question 7

Multiple Choice

In entering the billing address for a new client in Emil Company's computerized database, a clerk erroneously entered a nonexistent zip code.As a result, the first month's bill mailed to the new client was returned to Emil Company.Which one of the following would most likely have led to discovery of the error at the time of entry into Emil Company's computerized database?

• A)Limit test
• B)Validity test
• C)Parity test
• D)Record count test

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Definitions:

Moral Hazard

The tendency of individuals or institutions to take on more risk when they know that they will not have to bear the full consequences of their actions.

Adverse Selection

A situation where asymmetric information results in high-risk individuals being more likely to participate in agreements or contracts, to the detriment of one party.

Moral Hazard

The situation where one party is more likely to take risks because another party bears the consequences.

Incentives

Rewards or penalties that motivate individuals or entities to act in certain ways.