Question

please answer for question c and explain.

X 12.1.38 Question Help An accounting firm assists small businesses file annual tax forms. It assigns each new client to a CPA who specializes in companies of that type and size. To speed the process, each business submits a preliminary tax form Complete parts (a) through (d) below. (a) Would a normal model be useful to describe the size of adjustments when a CPA reviews the preliminary tax forms? (For example, suppose the preliminary form claims that the business owes taxes of $40,000. If the form completed by the CPA says the tax obligation is $35,000, then the adjustment is - $5,000.) A. No, because the adjustments are likely to be left skewed since they cannot be greater than 0. *B. Yes, because each adjustment is a sum of many small corrections of similar spread. OC. No, because the same CPA reviews each form, so the adjustments are not independent OD. Yes, because all numerical continuous variables can use a normal model given that the sample size is large enough. (b) What data would help determine if a normal model is appropriate? (Data from the current year cannot be used, those data are not yet available.) O A Data for adjustments from prior years for all types of businesses VB. Data for adjustments from prior years for this CPA and others who handle comparable types of businesses C Data for adjustments from prior years from this accounting firm and other accounting firms OD Data for adjustments from prior years for all small businesses

Answer 1

SD or Standard Deviation indicates the amount of variation from the set of values. In statistical terms Standard Deviation indicates the variation of the values from the mean.

Higher standard deviation tend to show that variation from the mean will be higher while the lower standard deviation indicates the values will be near to Mean.

Based on information provided we have been provided mean values of -9,000 and Standard Deviation value is not provided. The standard deviation would indicate the variation from average adjustment of -9,000.

Hence the value -9,000 is appropriate since SD would indicate variation to average value.