Auditors Are Evaluating an Account with a Recorded Balance of $700,000

question 11

Multiple Choice

Auditors are evaluating an account with a recorded balance of $700,000 using classical variables sampling.Based on an allowable risk of incorrect acceptance of 10%,the auditors have determined the following: • Estimated account balance = $640,000
• Precision = $20,000
• Tolerable misstatement = $50,000
Which of the following best describes the auditors' decision and rationale for that decision?

• A) The auditors would accept the account balance as fairly stated, since the sample estimate falls outside of the precision interval.
• B) The auditors would conclude that the account balance is not fairly stated, since the sample estimate falls outside of the precision interval.
• C) The auditors would accept the account balance as fairly stated, since the difference between the upper bound of the precision interval and recorded balance is less than the tolerable misstatement.
• D) The auditors would conclude that the account balance is not fairly stated, since the difference between the lower bound of the precision interval and recorded balance exceeds the tolerable misstatement.

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Definitions:

Ethology

The scientific study of animal behavior, often with a focus on behavior under natural conditions, and the understanding of behavior from an evolutionary perspective.

Biologically-Oriented

A perspective or approach that focuses on the biological or genetic factors in the study of organisms or behaviors.

Development

The process of growth or progression through a series of progressive changes, typically from a simpler to a more complex or better state.

Mesosystem

The interlocking settings that influence the child, such as the interaction of the school and the larger community when children are taken on field trips.