ACCA Applied Knowledge · Management Accounting · Sampling methods
A firm wants to estimate the proportion of invoices containing errors. Its population is all 12,000 invoices issued in the year, but the sampling frame supplied is a ledger listing only invoices issued in the first nine months. What is the main problem this creates?
The incomplete frame causes selection bias, because invoices from the last three months have no chance of being chosen. The sample can only represent the nine months listed, so conclusions about the whole year's population may be misleading even if selection within the frame is random.
- ARandom error that increases with sample size
- BNon-response bias from invoices not returned
- CSelection bias because some population members cannot be selectedCorrect
- DLoss of the sample's ability to be random within the frame
Explanation
Invoices from the last three months have no chance of selection, so the frame does not cover the population and the sample may be unrepresentative. Non-response is unrelated, and random selection within the frame is still possible, but the frame itself is incomplete.
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