CHAPTER 2:

VISUALIZING AND
PRESENTING DATA
 PPT 2: INTRODUCTION TO
STATISTICS AND TYPES OF
DATA VARIABLE

Chapter II: Visualizing and Presenting Data September 21, 2020 2

STATISTICS
 Originated from the Latin word status which means “state”.
 Statistics as a science. (singular sense)
 Statistics as actual number derived from the data. (plural sense)
 The science dealing with data about the condition of a state or
community.
 It is the branch of science that deals with the collection,
presentation, organization, analysis, and interpretation of data.
 Sir Ronald Fisher is known as the father of modern statistics and
experimental design.

Chapter II: Visualizing and Presenting Data September 21, 2020 3

APPLICATIONS OF STATISTICS IN ACCOUNTING

 Statistics is very important in accounting profession due to it

indispensable role in the summarizing, presenting and reporting of
accounting information for effective communication in an
organization.
 Accountants who perform audits benefit greatly from
understanding and using statistical analysis. For example, when
conducting a reliability assessment, one of the accountant’s first
tasks is to gather evidence. Auditors know that the easiest way to
do this is by looking at a portion of the whole, rather than gathering
every bit of data available. Statistically representative samples are
preferred in this area as they help auditors work more efficiently
and objectively.
Chapter II: Visualizing and Presenting Data September 21, 2020 4
APPLICATION OF STATISTICS IN ACCOUNTING

 Accountants use statistics to forecast consumption, earnings, cash flow

and book value. Simply put as accounting for the future, forecasting
involves an amount of guesswork about the future – and when people
guess, they frequently make errors. Having a thorough understanding
of the distribution and metrics for evaluating that error, accountants are
better able to more efficiently make predictions about the future.
 Accountants are frequently required to specify a premium that reflects
the risk, or range of error, with any given forecast. Known as the
discount rate, accountants often use statistical principles, such as
correlation and distribution, to anticipate this risk and account for it
when setting a valuation. More recently, accountants are using more
sophisticated statistical techniques, such as co-variance and beta
models, to limit valuation error.
Chapter II: Visualizing and Presenting Data September 21, 2020 5
 POPULATION AND SAMPLE

DEFINITION:
Population- consists of the totality of the observations which we are
concerned
Sample- subset of a population
Chapter II: Visualizing and Presenting Data September 21, 2020 6
EXAMPLE:
 If we wish to determine the average expenditure of all
households in Metro Manila, then the population of
interest is the collection of all households in Metro
Manila. If we were to delimit the scope of the study,
possibly due to budget constraints, then we would
have to redefine the population of interest. This time
we can delimit the scope of the study to include only
the collection of all household in Quezon City or the
collection of all households in Manila.

Chapter II: Visualizing and Presenting Data September 21, 2020 7

DEFINITION
 The variable is a characteristic or attribute
of the elements in a collection that can
assume different values for the different
elements.
 An observation is a realized value of a
variable.
 Data is the collection of observations.
Chapter II: Visualizing and Presenting Data September 21, 2020 8
EXAMPLE 1:
Below are illustrations of variables together with their possible values:

Variable Possible Observations

 S= sex of a student Male, Female
 E= employment status of an employee Temporary, Permanent, Contractual
 I= monthly income of a person 𝑖≥0
 N= number of children of a teacher 𝑛 = 0, 1, 2, 3, … … … … … … … . .
 H= height of a basketball player ℎ > 0 𝑐𝑒𝑛𝑡𝑖𝑚𝑒𝑡𝑒𝑟𝑠

Chapter II: Visualizing and Presenting Data September 21, 2020 9

EXAMPLE 2:
Identify the population under study and variable/s of interest.

 The office of admissions is studying the relationship between the

score in the entrance examination during application and the
general weighted average (GWA) upon graduation among
graduates of the university from 2000- 2005.

Population: collection of all graduates of the university from the

years 2000-2005
Variable of Interest: score in the entrance examination and GWA

Chapter II: Visualizing and Presenting Data September 21, 2020 10

 The research division of a certain
pharmaceutical company is investigating the
effectiveness of a new diet pill in reducing weight
on a female adults.
Population: set of all female adults who will use
the diet pill
Variable of interest: weight before taking the diet
pill, weight after taking the diet pill

Chapter II: Visualizing and Presenting Data September 21, 2020 11

DEFINITION:

Parameter is a summary measure

describing a specific characteristic of
the population.
Statistic is a summary measure
describing a specific characteristic of
the sample.

Chapter II: Visualizing and Presenting Data September 21, 2020 12

EXAMPLE:
 For example, say you want to know the mean income of the subscribers to a
particular magazine—a parameter of a population. You draw a random sample
of 100 subscribers and determine that their mean income is $27,500(a statistic).
You conclude that the population mean income μ is likely to be close to $27,500
as well. This example is one of statistical inference.
Different symbols are used to denote statistics and parameters :

Sample Statistic Population Parameter

Mean
𝑥 𝜇
Variance
𝑠2 𝜎2
Standard Deviation
𝑠 𝜎

Chapter II: Visualizing and Presenting Data September 21, 2020 13

TWO BROAD CATEGORIES OF STATISTICS

Descriptive Statistics
Inferential Statistics

Chapter II: Visualizing and Presenting Data September 21, 2020 14

DESCRIPTIVE STATISTICS
 It is used to describe a mass of data in a clear,
concise, and informative way.
 It includes all the techniques used in
organizing, summarizing, and presenting the
data on hand.
 It uses tables, graphs, charts, and compute for
summary measures like averages, proportions,
and percentages.
Chapter II: Visualizing and Presenting Data September 21, 2020 15
TYPES OF DESCRIPTIVE STATISTICS

There are 3 main types of descriptive statistics:

 The distribution concerns the frequency of each
value
 The central tendency concerns the averages of
the values
 The variability or dispersion concerns how
spread out the values are

Chapter II: Visualizing and Presenting Data September 21, 2020 16

EXAMPLES OF DESCRIPTIVE STATISTICS
 Academic records of the graduating classes during the past 5
years at University of Massachusetts show that 72% of the
entering freshmen eventually graduated. The numerical value,
72% is a descriptive statistic.
 At least 5% of all fires reported last year in a certain city were
deliberately set by arsonists.
 The number of positive cases of coronavirus in the Philippines is
around 300,000.
 This says that about 39% of the variation in iron intake is
explained by protein intake. Or, conversely, 39% of the protein
intake is explained by the variation in the iron intake. Both
interpretations are equivalent.
Chapter II: Visualizing and Presenting Data September 21, 2020 17
INFERENTIAL STATISTICS
 It includes all the techniques used in analyzing the
sample data that will lead to generalizations about a
population from which the sample came from.
 Do not simply describe the sample data. Rather, it uses
the sample data to form conclusions about the
population.
 Whatever conclusions it makes using inferential statistics
is always subject to some error.

Chapter II: Visualizing and Presenting Data September 21, 2020 18

EXAMPLES OF INFERENTIAL STATISTICS

 As a results of recent cutbacks by the oil-producing

nations, we can expect the price of gasoline to double
in the next year.
 Assuming that less than 20% of the Columbian coffee
beans were destroyed by frost this past winter, we
should expect an increase of no more than 30 cents
for a kilogram of coffee by the end of the year.
 They expect the number of deaths of coronavirus in
the Philippines will be around 5,000 at the end of
September 2020.
Chapter II: Visualizing and Presenting Data September 21, 2020 19
STATISTICAL INQUIRY
 It is a designed research that provides information needed to solve a research
problem.

STEPS IN A STATISTICAL INQUIRY

 Identify the problem
 Plan the study
 Collect the data
 Explore the data
 Analyze data and interpret the results
 Present the results

Chapter II: Visualizing and Presenting Data September 21, 2020 20

MEASUREMENT
 It is the process of determining the value or label of the variable
based on what has been observed.

LEVELS OF MEASUREMENT
 Nominal
 Ordinal
 Interval
 Ratio

Chapter II: Visualizing and Presenting Data September 21, 2020 21

NOMINAL LEVEL OF MEASUREMENT
 It is a classificatory level which is the weakest level of measurement
because it uses symbols or numbers for the sole purpose of
classifying and individual or object into two or more categories.
 The magnitudes of the numbers and the difference between
numbers have no meaning.
 Examples of nominal level of measurements are the following:
religion (1-Catholic 2-Protestant 3- Islam 4-INC 5-others), type of
protected area (1-national parks 2- game refuge and bird
sanctuaries 3- wilderness areas), major island group of residence
(1-Luzon 2-Visayas 3-Mindanao) , and type of movie with categories
(1-romance 2-adventure 3-horror 4-others)

Chapter II: Visualizing and Presenting Data September 21, 2020 22

ORDINAL LEVEL OF MEASUREMENT
 It uses numbers in the scale to classify an object into
categories.
 It can arrange these numbers in some low-to-high or high-to-
low manner, according to the property.
 It doesn’t make use of a fixed unit of measure throughout the
scale.
 Examples of ordinal level of measurement are the following:
shirt size (1-small 2-medium 3-large 4-extra large), faculty rank
of a teacher (1-Professor 2-Associate Professor 3-Assistant
Professor 4- Instructor), and ranking of a student in a class
according to his academic performance (First, Second, Third,
and so on)
Chapter II: Visualizing and Presenting Data September 21, 2020 23
INTERVAL LEVEL OF MEASUREMENT
 It ranks data, and precise differences between units of
measure do exist; however, there is no meaningful zero.
 The zero point in the interval level is not an absolute
zero.
 Examples of interval level of measurements are the
following : Intelligent Quotient (IQ) scores, scores in an
examination, time if measured using a 12-hour clock,
SAT score, Cumulative Grade Point Average, and
temperature (Celsius or Fahrenheit).

Chapter II: Visualizing and Presenting Data September 21, 2020 24

RATIO LEVEL OF MEASUREMENT
It has all of the following properties:
1. The numbers in the system are used to classify a person/object into distinct,
nonoverlapping, and exhaustive categories;
2. The system arranges the categories according to magnitude;
3. The system has a fixed unit of measurement representing a set size throughout the
scale; and
4. The system has an absolute zero.

 Examples of ratio level of measurement are the following : height, weight, time,
salary, age, area, perimeter, volume, and temperature in Kelvin (because this scale
has a true zero point since 0K is the point at which all motion in matter stops, that is,
it represents the absence of thermodynamic temperature).

Chapter II: Visualizing and Presenting Data September 21, 2020 25

VARIABLES AND TYPES OF DATA
 Qualitative variables are variables that have distinct categories according to
some characteristic or attribute. For example, if subjects are classified according
to gender (male or female), then the variable gender is qualitative. Other
examples of qualitative variables are religious preference and geographic
locations.
 Quantitative variables are variables that can be counted or measured. For
example, the variable age is numerical, and people can be ranked in order
according to the value of their ages. Other examples of quantitative variables are
heights, weights, and body temperatures.
 Discrete variables assume values that can be counted.
 Continuous variables can assume an infinite number of values between any
two specific values. They are obtained by measuring. They often include
fractions and decimals.

Chapter II: Visualizing and Presenting Data September 21, 2020 26

Example: Discrete or Continuous Data
Classify each variable as a discrete or continuous variable.
 a. The number of hours during a week that children ages 12 to 15 reported that
they watched television.
 b. The number of touchdowns a quarterback scored each year in his college
football career.
 c. The amount of money a person earns per week working at a fast-food
restaurant.
 d. The weights of the football players on the teams that play in the NFL this year.
S O LU T I O N
 a. Continuous, since the variable time is measured
 b. Discrete, since the number of touchdowns is counted
 c. Discrete, since the smallest value that money can assume is in cents
 d. Continuous, since the variable weight is measured
Chapter II: Visualizing and Presenting Data September 21, 2020 27
REFERENCES:
 Almeda, J. et al., Elementary Statistics, UP Press,
2017
 Bluman, A., Elementary Statistics 10th Edition, The
McGraww-Hill Companies, Inc., 2018
 Walpole, et. al., Probability and Statistics for
Engineering and Scientists 9th edition, Pearson
Education, Inc., 2012

Chapter II: Visualizing and Presenting Data September 21, 2020 28