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An auditor inspects 2 5 transactions processed by the business office of a company. The auditor selects these transactions at random from the thousands that

An auditor inspects 25 transactions processed by the business office of a company. The auditor selects these transactions at random from the thousands that were processed in the most recent three months. In the past, the auditor has found10% of transactions at this type of company to have been processed incorrectly(including such errors as wrong account, incorrect budget code, and incomplete records). Mark the following statement as true or false. If you believe that a statement is false, briefly explain why you think it is false.
It would be unlikely for the auditor to discover more than 10 errors among these transactions because such an event lies more than 4 SDs above the mean.
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Part 1
Choose the correct answer below.
A.
The statement is true.
B.
The statement is false. Finding 10 errors is more than 4 SDs below the mean, so the auditor is very unlikely to find more than 10 errors.
C.
The statement is false. Finding 10 errors is within 1 SD of the mean, so finding more than 10 errors would not be an unusual result.
D.
The statement is false. Finding 10 errors is more than 4 SDs above the mean, so the auditor is almost certain to find more than 10 errors.

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