What Type of Probability Distribution Will the Consulting Firm Most

question 21

Multiple Choice

What type of probability distribution will the consulting firm most likely employ to analyze the
Insurance claims in the following problem?
An insurance company has called a consulting firm to determine if the company has an
Unusually high number of false insurance claims.It is known that the industry proportion for
False claims is 3%.The consulting firm has decided to randomly and independently sample
100 of the company's insurance claims.They believe the number of these 100 that are false
Will yield the information the company desires.

• A) binomial distribution.
• B) Poisson distribution.
• C) hypergeometric distribution.
• D) none of the above.

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Definitions:

Interim Periods

Interim Periods are shorter time frames within a fiscal year, during which a company reports its financial performance, often quarterly or semi-annually.

Prepaid Expense

Expenses paid in advance and recorded as assets until they are used or consumed.

Periodicity Assumption

An accounting principle that divides the ongoing activities of a business into set periods of time, such as months or years, to produce financial statements for those periods.

Adjusting Entries

Journal entries made in accounting records at the end of an accounting period to allocate income and expenditure to the period they actually belong.