A 001 Significance Level Is Being Used to Test a Correlation

question 54

Multiple Choice

A 0.01 significance level is being used to test a correlation between two variables. If the linear correlation coefficient r is found to be 0.591 and the critical values are $$r = \pm 0.590$$ what can you conclude?

• A)There is not sufficient evidence to support the claim of a linear correlation between the two variables.
• B)There is sufficient evidence to support the claim of a linear correlation between the two variables.

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Definitions:

Continuing Operations

The segments or activities of a business expected to continue for the foreseeable future, excluding any discontinued operations.

Revenue Recognition

The accounting principle that determines the specific conditions under which revenue is recognized or accounted for.

Conservatism

An accounting principle that dictates to recognize expenses and liabilities as soon as possible, but revenues and assets only when they are assured of being received.

Gross Profit Method

A technique used to estimate the amount of inventory a business has by applying the gross margin ratio to the cost of goods sold.