Your Client's Company Wants to Determine the Relationship Between Its

question 170

Multiple Choice

Your client's company wants to determine the relationship between its monthly operating costs and a potential cost driver.The output of regression analysis showed the following information:
Intercept Coefficient = 75,828
X Variable 1 Coefficient = 52.61
R-square = 0.9756
Should your client use this information to predict monthly operating costs?

• A)No,because R-square is so high.
• B)Yes,because R-square is so high.
• C)Yes,because regression analysis can be relied upon.
• D)There is not enough information to make this prediction.

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Definitions:

Equity

The residual interest in the assets of an entity after deducting liabilities, representing ownership interest in the company.

Accounts Payable

Liabilities owed by a business to its suppliers or creditors for goods or services received but not yet paid for.

T-account

A graphical representation of a general ledger account that outlines the effects of transactions on account balances.

Debit

An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet.