Romo,CPA Performed Nonstatistical Sampling to Examine the Inventory Balances of Jones

question 60

Multiple Choice

Romo,CPA performed nonstatistical sampling to examine the inventory balances of Jones Company.The sample included 125 of the total 1,250 items with a recorded value of $550,000.Romo determined the expected misstatement to be $25,000 and the tolerable misstatement to be $40,000.The sample had a recorded value of $54,000 and an audited value of $52,000.What conclusion did Romo draw regarding the account balance?

• A) Conclude that the account balance is fairly stated, since the estimated misstatement is greater than the expected misstatement.
• B) Conclude that the account balance is not fairly stated, since the estimated misstatement is greater than the tolerable misstatement.
• C) Conclude that the account balance is not fairly stated, since the estimated misstatement is less than the expected misstatement.
• D) Conclude that the account balance is fairly stated, since the estimated misstatement is less than the tolerable misstatement.

Familiarize with methodological approaches like unobtrusive measures, correlational research, random assignment, and case studies.

Recognize the concept and implications of the third-variable problem.

Understand the advantages and limitations of different research methods including experimental, correlational, and observational studies.

Learn the importance of random sampling and how it differs from random assignment.

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Definitions:

Economic Person

A theoretical concept that assumes individuals act rationally and primarily out of self-interest, seeking to maximize their own utility.

Perfect Prototype

An ideal or optimal model of a process, product, or concept that serves as a standard for replicating or comparing similar entities.

Bounded Rationality

A concept that individuals make decisions based on the limited information they have available and their own mental limitations.

Nobel Prize

A set of international awards given annually in several categories including Peace, Literature, and various sciences, recognizing significant contributions to humanity.