The Internal Auditing Staff of a Local Manufacturing Company Performs

question 47

Multiple Choice

The internal auditing staff of a local manufacturing company performs a sample audit each quarter to estimate the proportion of accounts that are delinquent more than 90 days overdue.The historical records of the company show that over the past 8 years 13 percent of the accounts are delinquent.For this quarter,the auditing staff randomly selected 250 customer accounts.What is the probability that no more than 40 accounts will be classified as delinquent?

• A)0.4207
• B)0.9207
• C)0.0793
• D)0.4015
• E)0.9015

Understand the criteria for classifying a company as a parent or subsidiary and the implications for financial statements.

Comprehend the cost method and equity method of accounting for investments.

Analyze the implications of dividend distributions on the carrying value of investments.

Grasp the concept of comprehensive income and the components that constitute it.

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Definitions:

Industry Average

A benchmark or standard performance metric across a sector or industry, useful for comparison and strategic planning.

LIFO

Last In, First Out is a method for valuing inventory that records the most recently manufactured goods as the first ones sold.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made on a periodic basis, not continuously, through physical counts.

Ending Inventory Cost

The total value of all goods available for sale at the end of an accounting period, calculated using a specific inventory costing method like FIFO or LIFO.