Professional Documents
Culture Documents
Relationship of Measures of Tendency and Accounting
Relationship of Measures of Tendency and Accounting
organization. It tells what the standing of the company is. indicates that the results of the company’s
business operations are far from the mean. The
Being an accountant, one has to consider
values are scattered. It indicates that the
different factors in assessing the performance of
company’s performance is not consistent.
the business with conviction.
Revenue or sales is not a good barometer in SUMMARY:
measuring the performance of the business.
Mean > Mode = Good
A company’s sales may be high but this does not
Mean > Median = Good
mean that the company is performing better
Mean > Median & Mode = Good
especially when the company’s liabilities or cost
Mean < Mode = Not Good
of production is also high or in proportion with
Mean < Median = Not Good
the increase in sales.
Low standard deviation = sales of the company are alike
Mode - the value or amount that appears most frequently. or close within the mean
High standard deviation = sales of the company are
If the mode is higher than the value of the mean, fluctuating or far from the mean
it indicates that majority of the months have
values that are still lower than the most frequent
value. It indicates that the company’s
performance for most of the months are not that
effective.
The managers or owners of the business must
review or assess the business to discover why
there are non-performing months and they must
come up with a strategic solution to improve the
company’s performance.