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Accounting 2

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Accounting 2


Statistical concepts are used in various aspects on industry. The following highlights the use of statistics in these industries: Accounting/Auditing, Insurance, and Medical (Pharmaceutical).In the accounting/auditing field, it is imperative that the auditor makes an effort to determine that financial statements are stated accurately and free of material error (appear to be stated accurately). To accomplish this task, auditors utilize test methods that include statistical sampling of accounting transactions -- payroll, accounts payable, accounts receivable, journal entries, etc.. This statistical approach is used for validating (determining the accuracy) financial statements through limited test work. This limited test work is based on the statistical approach of how a population reacts -- ie, a small sample of the population is generally representative of the entire population.The use of statistics provides the auditor with a tool that provides comfort in the amount of test work required to achieve ?adequate" scope coverage to meet a representative sample of the financial scope. This use of statistics provides an auditor with a lower cost approach to substantiate accuracy -- this is important to both the auditing firm and the industry being audited.Another industry that utilizes statistics ...

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