The Errors Listed Below Occurred in 20x3 but Were Not

question 89

Multiple Choice

The errors listed below occurred in 20x3 but were not discovered until much later in 20x4. The accounting period ends December 31. What net effect did these errors have on 20x3 pre-tax income?

• A) Overstated by $400
• B) Overstated by $800
• C) Understated by $400
• D) Understated by $1,200

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Definitions:

Poisson Distribution

A probability distribution that expresses the probability of a given number of events occurring in a fixed interval of time or space, assuming these events happen with a known constant mean rate and independently of the time since the last event.

Standard Deviation

An assessment of the range or distribution spread within a set of numbers.

Nuclear Power Plant

A facility that generates electricity by using nuclear reactions to produce heat, which then is used to power steam turbines.

Discrete Random Variables

Variables in statistical analysis that can take on a countable number of distinct values, often representing occurrences.