List the four types of measurement scales in order of measurement rigor. Describe and give examples of each type of scale.
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ANSWER:
The four types of measurement scales listed in order of measurement rigor are: nominal, ordinal, interval, and ratio. A nominal scale is a basic classification system, or a system of names. A chart of accounts is an example of nominal classification in accounting. An ordinal scale indicates (ranks) a degree of preference, but degrees of preference between ranks are not necessarily equal. Listing current assets and current liabilities in order of liquidity is an example of ordinal ranking. Interval scales also allow ranking of attributes, but the change in the attribute measured among assigned numbers must be equal. The Fahrenheit temperature scale is an example of an interval scale. The ratio scale also assigns equal value to the intervals between assigned numbers. However, unlike the interval scale, the zero point on a ratio scale indicates absence of the property measured. Because zero indicates “nothingness” in terms of dollar amounts, accounting numbers are based on a ratio scale.
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