Which of the Following Does Not Represent a Difference in the Use

question 71

Multiple Choice

Which of the following does not represent a difference in the use of monetary unit sampling (MUS) and classical variables sampling?

• A) Classical variables sampling incorporates the acceptable risk of incorrect rejection in determining the sample size but MUS does not.
• B) The need to formally stratify the sample is more important in MUS than classical variables sampling.
• C) MUS is more likely to be used in examining accounts likely to contain overstatement errors than classical variables sampling.
• D) The risk of incorrect acceptance is of primary concern to the auditor in MUS but not in classical variables sampling.

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Definitions:

LIFO

Last In, First Out, an inventory valuation method where the most recently produced items are recorded as sold first.

Current Costs

The cost associated with purchasing goods or services in the present time, often used in accounting to refer to the cost of inventory or services consumed.

Weighted Average Method

An inventory costing method that assigns a cost to inventory items based on the weighted average cost of all similar items purchased or produced during a period.

Inventory Items

Goods or materials that a company holds for the ultimate goal of resale or production.