1. When the State of Delaware receives tax forms, it puts them through a computer program to flag forms thatneed to be investigated further. The computer looks for mistakes in the forms (example: addition mistakes orincorrect deduction amounts).Suppose the computer correctly flags 80% of all returns that have mistakes, and it incorrectly flags 5% oferror-free returns. Further, suppose that 15% of all tax returns have errors.A tax return is flagged by the computer. What is the chance that it actually contains mistakes, given that thecomputer flagged it?

The probability of an event:Its a number between 0 and 1. 0 means impossibility of the event 1…

Answered: A tax return is flagged by the…

A tax return is flagged by the computer. What is the chance that it actually contains mistakes, given that the computer flagged it?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. When the State of Delaware receives tax forms, it puts them through a computer program to flag forms that
need to be investigated further. The computer looks for mistakes in the forms (example: addition mistakes or
incorrect deduction amounts).
Suppose the computer correctly flags 80% of all returns that have mistakes, and it incorrectly flags 5% of
error-free returns. Further, suppose that 15% of all tax returns have errors.
A tax return is flagged by the computer. What is the chance that it actually contains mistakes, given that the
computer flagged it?

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