The accounting department reports that the balance of accounts receivable is $210,000. You are willing to accept that balance if audit sampling suggests it is within $15,000 of the actual balance. Using a classical variables sampling plan, you compute a 95% confidence interval of $208,000 to $225,000. You would therefore:
A. not be able to determine the acceptability of the receivable balance.
B. accept the $210,000 balance because the confidence interval is within the materiality limits.
C. accept the balance but with a lower level of confidence.
D. take a larger sample before totally rejecting the balance and requiring adjustments.
Answer: B
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