MES Is Auditing a Client's Accounts Receivable Balance Recorded at $2

question 56

Multiple Choice

MES is auditing a client's accounts receivable balance recorded at $2 million using MUS sampling.The following parameters have been established for this account: • Tolerable misstatement = $200,000
• Expected misstatement = $100,000
• Risk of incorrect acceptance = 5%
Which of the following statements would not be true with respect to the sample size in this situation?

• A) The correct sample size is 116 customer accounts.
• B) Increasing tolerable misstatement from $200,000 to $600,000 (holding all other factors constant) will increase the sample size.
• C) If MES can accept a risk of incorrect acceptance of 10% (holding all other factors constant), sample size will be decreased to 80 accounts.
• D) Because the size of the population is relatively large, this element does not affect sample size.

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Definitions:

Frequency

The number of occurrences of a repeating event per unit of time, often used in physics, electronics, and statistics.

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A skin condition characterized by the presence of pimples, blackheads, and cysts, mainly due to oil gland overactivity and pore blockage.

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