Assume a mean-per-unit estimation variables sampling application with a tolerable misstatement of $70,000 and a book value of $700,000. After performing the sampling plan, the auditors calculated an allowance for sampling risk of $45,000 and a point estimate of the population's total audited value to be $650,000. Based on these results, the auditor would:
A. Conclude that there is too great a risk that the account balance is materially misstated, because the tolerable misstatement exceeds to the projected misstatement.
B. Conclude that the population does not contain a material misstatement, because the total audit value plus or minus tolerable misstatement includes the book value.
C. Conclude that there is too great a risk that the account balance is materially misstated, because one limit of the interval calculated by projected misstatement + or - allowance for sampling risk exceeds the tolerable misstatement.
D. Conclude that the population does not contain a material misstatement, because the tolerable misstatement exceeds the allowance for sampling risk.
Answer: C
You might also like to view...
Domino Company ages its accounts receivable to estimate uncollectible accounts expense. Domino began Year 2 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $76,500 and $5,800, respectively. During Year 2, the company wrote off $4,640 in uncollectible accounts. In preparation for the company's estimate of uncollectible accounts expense for Year 2, Domino prepared the following aging schedule:Number of DaysPast DueReceivablesAmount% Likely to beUncollectibleCurrent $104,000 1% 0-30 45,000 5% 31-60 9,920 10% 61-90 4,440 25% Over 90 3,800 50% Total $167,160 What amount will be reported as uncollectible accounts expense on the Year 2 income statement?
A. $4,640 B. $1,512 C. $7,292 D. $6,132
Discuss the effect on an instrument of: (a) contradictory amounts between the numerals and amount written in words on a check; (b) the interest rate left blank on a promissory note; and (c) contradictory terms that are typed onto a promissory note and terms that are preprinted on the note form
?The interest rate on a 10 percent, 10-year zero-coupon bond with a $1,000 face value falls from 8 percent to 7 percent. Which of the following is true of the value of the bond? (Round the answer to two decimal places.)
A. ?The present value of the bond at 8 percent is $508.34. B. ?The present value of the bond at 7 percent is $463.19. C. ?The maturity value of the bond at 8 percent is $508.34. D. ?The maturity value of the bond at 7 percent is $508.34. E. ?The present value of the bond at 7 percent is $508.34.
Consumer Shops, Inc., signs a lease for a storefront owned by Downtown Building Company. Unlike a purchaser of real property, Consumer Shops
A. acquires only temporary possession of the premises. B. enjoys exclusive possession of the premises. C. holds only temporary title to the premises. D. retains temporary, exclusive possession and title to the premises.