A Restaurant That Bills Its House Account Monthly Is Concerned

question 36

Multiple Choice

A restaurant that bills its house account monthly is concerned that the average monthly bill exceeds $200 per account. A random sample of twelve accounts is selected, resulting in a sample mean of $220 and a standard deviation of $12. The t-test is to be conducted at the 5% level of significance. The t-value is calculated to be 5.77. At the 0.01 level of significance, what is your decision?

• A) You reject the null hypothesis, and agree that the average monthly bill exceeds $200.
• B) You have insufficient evidence to reject the null hypothesis.
• C) You reject the alternate hypothesis and agree that the average monthly bill is less than $200.
• D) You should have used the z-test.

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Definitions:

Credits

Accounting entries that increase liabilities or equity or decrease assets, representing the opposite of debits.

Owner Invests

occurs when the owner of a business contributes assets, commonly in the form of cash or equipment, into the business for its use.

Retained Earnings

The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders, often used for reinvestment.

Revenue

Income generated from normal business operations and includes discounts and deductions for returned merchandise.