Law,CPA Is Using Nonstatistical Sampling in His Examination of Jye

question 61

Multiple Choice

Law,CPA is using nonstatistical sampling in his examination of Jye Company's accounts receivable.The recorded balance of Jye's accounts receivable was $750,000.Law selected a sample of customer accounts for examination,which were recorded at $50,000.Based on the responses received from accounts receivable confirmations,Law determined an audited value of $45,000 for the accounts receivable. If tolerable misstatement is $60,000,which of the following statements is not true?

• A) The actual misstatement identified by Law is $5,000.
• B) The estimated account balance would be $825,000.
• C) Law would conclude that the account balance is not fairly stated, since the estimated misstatement is greater than the tolerable misstatement.
• D) Law is not able to provide a quantitative conclusion as to the exposure to the risk of incorrect acceptance.

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Definitions:

Suprachiasmatic Nucleus

A region of the brain located in the hypothalamus that regulates circadian rhythms, controlling the body's internal clock.

Slave Oscillators

Secondary timekeeping systems that synchronize with a primary oscillator to regulate rhythms in organisms.

Thalamus

Diencephalon structure through which information from all sensory systems is organized, integrated, and projected into the appropriate region of the neocortex.

Suprachiasmatic Nucleus

A tiny region of the brain in the hypothalamus, responsible for controlling the circadian rhythm or the body's internal clock.