The Client's Trial Balance Has a Balance of $410,000 for Merchandise

question 87

Multiple Choice

The client's trial balance has a balance of $410,000 for merchandise inventory.As the auditor you are willing to accept a balance that is within $20,000 of either side of the recorded balance.You compute a 95% confidence interval of $395,000 to $425,000.You could therefore:

• A)reject the trial balance amount.
• B)accept the trial balance amount.
• C)increase the sample size to assure more precision.
• D)use alternative audit procedures to satisfy yourself as to the correct balance.

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Definitions:

Expected Cash Flows

The anticipated stream of cash payments or receipts over a given period, used in evaluating investments or business projects.

Market

A venue or system where parties engage in exchange of goods, services, or information, including physical marketplaces or virtual markets.

Sole Proprietorship

A business owned and operated by a single individual, where there is no legal distinction between the owner and the business.

Raising Money

The process by which businesses and other entities obtain capital from external sources to finance operations, projects, or expansions.