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What does the following scatter gram suggest?
A. Sales revenue is inversely related to training costs.
B. The training program is not effective.
C. Training costs do not affect sales revenue.
D. Several data points are incorrectly plotted.
Correct Answer: C
Explanation/Reference:
Explanation:
Internal auditors may use scatter diagrams to detect misstated data, relationships among variables, and unusual operating results. A scatter diagram is a graph of data points. When the points have a systematic relationship, the independent (x) variable and dependent (y) variable are likely to be correlated; i.e.. the value of one variable is a predictor of the value of the other. However, the variables in this scatter gram are clearly uncorrelated because training costs do not predict sales.
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