Monetary-Unit Sampling Should Not Be Used If

question 15

Multiple Choice

Monetary-unit sampling should not be used if

• A) The population includes several large items.
• B) The auditor expects overstatement errors.
• C) Many items in the account are expected to have errors.
• D) No items in the account are expected to have errors.

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Definitions:

Debt-Paying Ability

A financial metric used to gauge a firm's capacity to settle its obligations, often assessed through ratios such as the debt to equity or debt service coverage ratios.

Operating Cycle

The duration it takes for a company to buy inventory, sell that inventory, and collect cash from the sale, representing the time it takes to convert resources into cash flows.

Notes Payable

A liability recorded on a balance sheet, representing a written promise to pay a certain amount in the future.

Instalment Payments

Instalment payments are payments made towards the purchase of an item or repayment of a loan that are spread out over a period of time in fixed amounts.