Question

Depreciation is an example of cost incurred by a business in the past. Such non-cash expenses should not be considered for decision making from the perspective of finance, even if they would reduce the reported profits.

O True
O False

Assuming normal distribution, what would be the proportion of observations falling within one standard deviation of the mean?
1.O 25%
2.O 32%
3.O 50%
4. O 68%
5.O 75%

Answer 1

False.

Non-cash expenses like depreciation should be considered for decision making from a financial perspective, even if they reduce reported profits. Depreciation is an accounting method used to allocate the cost of an asset over its useful life. While it doesn't involve an actual cash outflow, it represents the wear and tear or obsolescence of an asset and reflects the costs incurred by the business in the past. Therefore, depreciation plays a crucial role in accurately assessing the financial performance and determining the true profitability of a business.

Regarding the proportion of observations falling within one standard deviation of the mean assuming a normal distribution:

The proportion of observations falling within one standard deviation of the mean is approximately 68%. This is based on the empirical rule, also known as the 68-95-99.7 rule, which states that in a normal distribution, approximately 68% of the data falls within one standard deviation of the mean.

~~~Harsha~~~