One of the Reasons That a Correction for Continuity Adjustment

question 162

True/False

One of the reasons that a correction for continuity adjustment is needed when approximating the binomial distribution with a normal distribution is because the probability of getting a specific value of a random variable is zero with the normal distribution.

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Definitions:

Reported Earnings

The profits announced by a corporation, reflecting the financial performance over a specific period, usually a fiscal quarter or year.

GAAP's Flexibility

The allowance within Generally Accepted Accounting Principles for interpretation or adaptation to different situations, providing certain leeway in financial reporting.

Accounting Principles

The rules and guidelines that companies must follow when reporting financial data and statements, ensuring transparency and fairness in financial reporting.

International Accounting Standards Board

An independent organization that develops and approves International Financial Reporting Standards (IFRS).