If an accounts payable transaction has a z-score of 3, with a mean of $20,000 and a standard deviation of $5,000, what is the amount of the related party transaction?
A) $20,000
B) $15,000
C) $25,000
D) $35,000

Question

Quizplus · Accepted Answer

The z-score formula is $z = \frac{(X - \mu)}{\sigma}$, where $X$ is the value, $\mu$ is the mean, and $\sigma$ is the standard deviation. Plugging in the given values: $3 = \frac{(X - 20000)}{5000}$. Solving for $X$ gives $X = 20000 + 3(5000) = 35000$.

If an Accounts Payable Transaction Has a Z-Score of 3