Auditors Are Evaluating an Account with a Recorded Balance of $500,000

question 76

Multiple Choice

Auditors are evaluating an account with a recorded balance of $500,000 using mean-per-unit estimation.This account is comprised of 1,000 individual components.The auditors sampled 100 items and determined a total audited value of $52,500.Using a risk of incorrect acceptance of 10%,the auditors determined a precision of $40,000.If the tolerable misstatement is $50,000,which of the following is not true?

• A) The estimated recorded value of this account is $525,000.
• B) A 90% probability exists that the true population value falls between $460,000 and $540,000.
• C) The auditors would conclude that the account balance is fairly stated.
• D) The probability that the auditors will incorrectly accept a materially misstated account balance is 10%.

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Definitions:

Criteria

Standards or benchmarks on which judgments or decisions can be based.

Percent

A way of expressing a number as a fraction of 100, used to describe proportions or ratios.

DSM-5

The Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, a handbook used by healthcare professionals as the authoritative guide to the diagnosis of mental disorders.

Autism Spectrum Disorder

A developmental disorder characterized by difficulties in social interaction and communication, and by restricted or repetitive patterns of thought and behavior.