Using Statistical Sampling to Assist in Verifying the Year-End Accounts

question 12

Multiple Choice

Using statistical sampling to assist in verifying the year-end accounts payable balance, an auditor has accumulated the following data:
Using the ratio estimation technique, the auditor's estimate of the year-end accounts payable balance would be:

• A) $6 000 000.
• B) $6 150 000.
• C) $5 050 000.
• D) $5 125 000.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was put into use.

Anticipated Benefits

Anticipated benefits are the expected positive outcomes or gains that result from particular actions or investments.

Useful Life

The expected period over which an asset is anticipated to be used by an organization, or the number of production or similar units expected to be obtained from the asset.

Production Capacity

The maximum output a business can produce in a given period under normal conditions.