An Auditor Established a $60,000 Tolerable Misstatement for an Account

question 5

Multiple Choice

An auditor established a $60,000 tolerable misstatement for an account balance of $1,000,000. The auditor selected a sample of every twentieth item from the population of 1,000 items that represented the asset account balance and discovered overstatements of $3,700 and understatements of $200. Under these circumstances, the auditor most likely would conclude that:

• A)there is an unacceptably high risk that the actual misstatements in the population exceed the tolerable misstatement because the total projected misstatement is more than the tolerable misstatement.
• B)there is an unacceptably high risk that the tolerable misstatement exceeds the sum of actual overstatements and understatements.
• C)the asset account is fairly stated because the total projected misstatement is less than the tolerable misstatement.
• D)the asset account is fairly stated because the tolerable misstatement exceeds the net of projected actual overstatements and understatements.

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Definitions:

Configurable Computing Resources

Computing components like CPU power, memory, and storage that can be adjusted or scaled according to the needs of the user or application.

On-Demand Access

Provisioning immediate access to resources or services whenever and wherever they are required by the user, similar to "on-demand" but emphasizing the accessibility aspect.

Pay-As-You-Go

A payment model where services or goods are paid for as they are used, rather than through a subscription or upfront fee.

-As-A-Service

-As-A-Service denotes business models where products or services are provided over the internet on a subscription basis, such as Software-as-a-Service (SaaS).