A Company Has Determined That the Mean Number of Days

question 7

Multiple Choice

A company has determined that the mean number of days it takes to collect on its accounts receivable is 36, with a standard deviation of 11 days. The company plans to select a random sample of n = 12 accounts and compute the sample mean. Which of the following statements holds true in this situation?

• A) The sampling distribution may actually be approximately Normally distributed depending on what the population distribution is.
• B) The sampling distribution will always have the same distribution as the population.
• C) The sampling variability will be greater than if they had sampled n = 64 accounts.
• D) The sampling distribution will certainly be approximately Normally distributed in this case.
• E) The sampling distribution cannot be approximately Normally distributed in this case.

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Definitions:

Service Revenue

Income earned by a company for providing services rather than selling physical goods.

Equipment

Equipment consists of the fixed assets a company uses in its operational activities to produce goods or provide services, not intended for sale.

Prepaid Insurance

An asset account that represents insurance payments made in advance, which are to be expensed over the period the insurance coverage pertains to.

Unearned Rent

Income received from property rentals before the rental period has occurred, considered a liability until the period covers it.