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ACCA Applied Knowledge · Management Accounting · Sampling methods

A firm wants to estimate the average time taken to process all invoices received in a year. The sampling frame used is the list of invoices received only in December. Which problem does this create?

Using only December invoices as the frame means invoices from other months cannot be selected, so the frame does not cover the whole population. The sample may therefore be unrepresentative and biased, whatever the sample size or selection method used.

  1. AThe sampling frame does not cover the whole population, so the sample may be biasedCorrect
  2. BThe population becomes infinite
  3. CSampling error is eliminated
  4. DThe sample size becomes too large

Explanation

The population is all invoices received in the year, but the frame covers only December invoices. Items from other months have no chance of selection, so the sample may not be representative and results may be biased. This is a frame coverage problem rather than random sampling error.

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