In recent years major efforts have been made to standardize accounting practices

ID: 3216856 • Letter: I

Question

In recent years major efforts have been made to standardize accounting practices in different countries; this is called harmonization. In an article in Accounting and Business Research, Emmanuel N. Emenyonu and Sidney J. Gray studied the extent to which accounting practices in France, Germany, and the UK are harmonized.

(a) Depreciation method is one of the accounting practices studied by Emenyonu and Gray. Three methods were considered—the straight-line method (S), the declining balance method (D), and a combination of D & S (sometimes European firms start with the declining balance method and then switch over to the straight-line method when the figure derived from straight line exceeds that from declining balance). The data in the table (below) summarize the depreciation methods used by a sample of 78 French, German, and U.K. firms.

Use these data and the results of the chi-square analysis in the table (above) to test the hypothesis that depreciation method is independent of a firm's location (country) at the .05 level of significance. (Round your answer to 3 decimal places.)

(Click to select)RejectDo not reject H0: independence. Conclude depreciation method and country are (Click to select)dependentindependent.

Depreciation Methods France Germany UK Total A. Straight line (S) 15 0 25 40 B. Declining Bal (D) 1 1 1 3 C. (D & S) 10 25 0 35 Total companies 26 26 26 78

Explanation / Answer

we are given that

The results of the chi sqaure test are given in the question , we simply need to interpret the results

The null hypothesis is given as

H0 : depreciation method and country are not dependent on each other

H1 : depreciation method and country are dependent on each other

if the p value of the chi square test is less tha 0.05 , then we rejecrt the null hypothesis in favor of alternate hypothesis and conclude that depreciation method and country are dependent on each other .

as we can see the p value is 0.000 , as given in the output , hence we reject the null hypothesis in favor of alternate hypothesis . and conclude that the 2 variables are dependent

Chi-Square Test for Independence France Germany UK Total A. Straight line (S) 15 0 25 40 B. Declining Bal (D) 1 1 1 3 C. (D & S) 10 25 0 35 Total 26 26 26 78 50.894 chisquare 4 df 0.0000 p-value

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In recent years major efforts have been made to standardize accounting practices

In recent years major efforts have been made to standardizeaccounting practices

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In recent years major efforts have been made to standardize accounting practices

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