Assume a Mean-Per-Unit Estimation Variables Sampling Application with a Tolerable

question 81

Multiple Choice

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 the population does not contain a material misstatement,because the tolerable misstatement exceeds the allowance for sampling risk.
• 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 the tolerable misstatement exceeds to the projected misstatement.
• D)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.

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Definitions:

Neoclassical Economics

A framework for understanding economics that focuses on the determination of goods, outputs, and income distributions through supply and demand mediated through prices.

Behavioral Economics

A field of study that applies psychological insights into human behavior to explain economic decision-making.

Behavioral Economists

Economists who study the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions.

Temptation

The desire to do something, often something wrong or unwise, driven by impulse or short-term gratification.