Assume That Dylan Lee Found Two Deviations in a Sample

question 4

Multiple Choice

Assume that Dylan Lee found two deviations in a sample of 90 transactions.Using AICPA sample evaluation tables,the upper limit rate of deviation at a 5 percent risk of overreliance is

• A) 2.0%.
• B) 2.2%.
• C) 5.9%.
• D) 6.9%.

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Definitions:

Credit Policy

The guidelines a company follows to determine the creditworthiness of its customers and the terms and conditions of credit it will extend to them.

Bad Debts

Amounts owed to a company that are written off as uncollectible, typically from customers who fail to pay their invoices.

Credit Policy Relaxation

The act of making a company's criteria for extending credit more lenient, aiming to boost sales at the risk of higher bad debts.

Accounts Receivable

Unpaid dues from customers to a company for goods or services already delivered.