When No Misstatements Are Found in a PPS Sampling Plan

question 9

Multiple Choice

When no misstatements are found in a PPS sampling plan:

• A) allowance for sampling risk must be adjusted upward to compensate.
• B) projected misstatement in the population is zero.
• C) sampling must continue until at least one deviation is found.
• D) the auditor should use a lower risk of incorrect acceptance in evaluating the sample than used in determining sample size.
• E) the expansion factor can always be ignored.

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Definitions:

MC (Marginal Cost)

The additional cost incurred in producing one more unit of a good or service.

Downward-Sloping Demand

A representation of the relationship between price and quantity demanded, indicating that as price decreases, demand increases.

Reasonable Substitutes

Alternative products or services that can satisfactorily replace others, meeting the same needs or wants.