Event 1 The Prior Probabilities of Events A₁,A₂,and A₃ Are P(A₁)= .50,P(A₂)=

question 125

Short Answer

Event 1
The prior probabilities of events A₁,A₂,and A₃ are P(A₁)= .50,P(A₂)= .20 and P(A₃)= .30.The conditional probabilities of event B given A₁,A₂,and A₃ are P(B / A₁)= .40,P(B / A₂)= .50 and P(B / A₃)= .30.
-Apply Bayes' theorem to compute the posterior probability P(A₃ / B).

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Definitions:

Working Papers

Documents that auditors create to support an audit process, including detailed records and summaries of audit evidence.

Operating Cycle

The average period it takes for a business to convert its inventory into cash flows from sales, reflecting the time taken to sell inventory, collect receivables, and pay bills.

Income Summary

An account used in the closing process that summarizes the results of operations—revenues and expenses—over a specific period before transferring the net amount to retain earnings.

Accounting Cycle

A complete cycle that describes the steps in recording and processing financial transactions of a company from when the transaction occurs to its representation on the financial statements, and until the accounts are closed.