How Would You Best Explain the Y-Intercept in This Situation

question 148

Multiple Choice

How would you best explain the y-intercept in this situation?

• A)For each additional 1-year increase in the age of the driver,we would expect damage to increase by $10,726.
• B)For each additional 1-year increase in the age of the driver,we would expect damage to increase by $70.
• C)It makes no sense to explain the intercept in this situation,since we cannot have a driver with an age of zero.
• D)The average amount of damage was $10,726.

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Definitions:

Economic Entity Assumption

An accounting principle that assumes a company and its owners are separate entities for recording and reporting financial transactions.

Basic Assumption

Fundamental principles underlying the preparation of financial statements, typically including economic entity, going concern, monetary unit, and periodic reporting.

Corporate Form

The structure of a corporation, recognized by law as a single entity separate from its owners, with its own rights, privileges, and liabilities.

Economic Entity Assumption

This accounting principle assumes that a company's financial activities are distinct from those of its owners or other businesses.