A Company Sells a Particular Product Only in the Last

question 20

Multiple Choice

A company sells a particular product only in the last month of its fiscal year.The company uses commission agents for such sales and pays them 6% of their net sales 30 days after the sales are made.The agents' sales were $10 million.Experience indicates that 10% of the sales are usually not collected and 2% are returned in the first month of the new year.The auditor would expect the year-end balance in the accrued commissions payable account to be

• A) $528,000.
• B) $540,000.
• C) $588,000.
• D) $600,000.
• $10,000,000 × 98% = $9,800,000 Net Sales × 6% commission percentage = $588,000 estimated accrued commissions payable.

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Definitions:

P-Value

Refers to the probability that observed data would occur if the null hypothesis were true, serving as a tool to evaluate evidence against the null hypothesis in statistical tests.

Degrees Of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution, affecting the calculation of various statistical tests.

P-Value

The probability of observing data at least as extreme as those observed, given that the null hypothesis is true, used in hypothesis testing.

Sample Size

The number of observations or individuals included in a sample from a population for the purpose of statistical analysis.