Franconia Sales Offers Warranties on All Their Electronic Goods $$\begin{array} { | l | r | r | } \hline \text { Estimated warranty payable } & 7,500 & \\\hline \text { Cash } & & 7,500 \\\hline\end{array}$$

question 20

Multiple Choice

Franconia Sales offers warranties on all their electronic goods.Warranty expense is estimated at 2% of sales revenue.In 2013,Franconia had $500,000 of sales.In the same year,Franconia paid out $7,500 of warranty payments.
-Which of the following is the entry needed to record the disbursement of warranty payments?

• A) \[\begin{array} { | l | r | r | }
• \hline \text { Estimated warranty payable } & 7,500 & \\
• \hline \text { Cash } & & 7,500 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Warranty expense } & 7,500 & \\
• \hline \text { Estimated warranty payable } & & 7,500 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | r | r | }
• \hline \text { Warranty expense } & 10,000 & \\
• \hline \text { Estimated warranty payable } & & 10,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Warranty expense } & 10,000 & \\
• \hline \text { Sales revenue } & & 10,000 \\
• \hline
• \end{array}\]

Distinguish between different decision-making criteria and understand their practical applications.

Analyze decision problems using decision trees and understand their advantages over decision tables.

Comprehend the expected value of perfect information (EVPI) and its significance in decision making.

Identify the impact of different states of nature on the outcome of decision alternatives.

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Definitions:

Power

The probability that a statistical test will correctly reject a false null hypothesis, effectively detecting an actual effect.

Type II Error

The mistake of failing to reject a false null hypothesis, also known as a "false negative" finding.

Dependent-Samples T-Test

A statistical test used to compare the means of two related groups, indicating if any difference between them is statistically significant.

Confidence Interval

The best estimate of the range of a population value given the sample value.