. The true proportion of accounts receivable with some kind of error is 8 percent for Moby Group. If an auditor randomly samples 100 accounts receivable,a) is it acceptable to use the normal approximation to estimate the probability that fewer than two will contain errors? Explain your reasoning.b) what is the mean and standard deviation of errors?c) assume the auditor takes a sample of 150, what is the probability that less than 5 will contain errors?

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Answered: The true proportion of accounts…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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. The true proportion of accounts receivable with some kind of error is 8 percent for Moby Group. If an auditor randomly samples 100 accounts receivable,

a) is it acceptable to use the normal approximation to estimate the probability that fewer than two will contain errors? Explain your reasoning.
b) what is the mean and standard deviation of errors?
c) assume the auditor takes a sample of 150, what is the probability that less than 5 will contain errors?

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