You have been placed in charge of determining the sample size for an audit of accounts receivable. Your superior would like a confidence level of 99%. How does this affect your determination of sample size? What can you infer about the level of risk of incorrect acceptance that your superior is willing to accept?
What will be an ideal response?
A lot of work will be required to achieve a 99% confidence level. This work is reflected in a relatively large sample size. Because confidence levels and the risk of incorrect acceptance are complements, the superior is willing to accept a 1% risk of incorrect acceptance.
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