An Auditor Uses Monetary Unit Sampling with a Sampling Interval

question 43

Multiple Choice

An auditor uses monetary unit sampling with a sampling interval of $20,000 and detects an item with a recorded amount of $10,000 with an audited value of $4,000. The projected misstatement of the sample is

• A) $12,000.
• B) $6,000.
• C) $10,000.
• D) $3,000.

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Definitions:

Vertically Integrated

A business structure where a company controls multiple stages of production or distribution within the same industry.

Production Constraint

A limitation or bottleneck that affects the quantity of products that can be produced within a given timeframe.

Overtime

The time worked beyond the standard hours set by a company's policy, often compensated at a higher pay rate.

Cost-plus Pricing

Pricing strategy where a fixed percentage is added to the total cost of making a product to determine its selling price.