An Auditor Plans to Examine a Sample of 20 Checks

question 17

Multiple Choice

An auditor plans to examine a sample of 20 checks for counter signatures as prescribed by the client's control procedures.One of the checks in the chosen sample of 20 cannot be found.The auditor should consider the reasons for this limitation and:

• A)Evaluate the results as if the sample size had been 19.
• B)Treat the missing check as a deviation for the purpose of evaluating the sample.
• C)Treat the missing check in the same manner as the majority of the other 19 checks,i.e. ,countersigned or not.
• D)Choose another check to replace the missing check in the sample.

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Definitions:

Binding Price Ceiling

A government-imposed limit on the price of a product or service that is set below the market equilibrium, leading to shortages and a decrease in supply.

Producer Surplus

The difference between the amount that producers are willing and able to sell a good for and the actual amount they receive due to market price.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a given time period.

Opportunity Cost

The relinquishment of possible advantages from alternate options upon making a choice.