Which of the Following Courses of Action Would an Auditor

question 6

Multiple Choice

Which of the following courses of action would an auditor most likely follow in planning a sample of cash disbursements if the auditor is aware of several unusually large cash disbursements?

• A)Set the tolerable misstatement at a lower level than originally planned.
• B)Stratify the cash disbursements population so that the unusually large disbursements are selected.
• C)Increase the sample size to reduce the effect of the unusually large disbursements.
• D)Continue to draw new samples until all the unusually large disbursements appear in the sample.

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Definitions:

Producer Surplus

The difference between the amount producers receive from selling a good or service and the minimum amount they would accept for that good or service.

Price Floor

A price floor is a government- or authority-set minimum price below which a particular good or service cannot legally be sold, aiming to prevent prices from falling too low.

Widgets

A generic term commonly used to refer to an unspecified, fictional product used in examples and economic theory.

Price Floor

A minimum price set by the government for certain goods and services that cannot legally be lowered, often above the equilibrium price.