How Does Monetary Unit Sampling (MUS)ensure That Larger Dollar Components

question 88

Multiple Choice

How does monetary unit sampling (MUS) ensure that larger dollar components are selected for examination?

• A)MUS requires the auditor to identify all items having a balance greater than performance materiality prior to beginning the sample selection process.
• B)MUS requires the auditor to stratify the sample into larger and smaller dollar components prior to beginning the sample selection process.
• C)MUS defines the sampling unit as an individual dollar within an account balance or class of transactions.
• D)MUS selects components having larger balances in the prior audit.

---

Definitions:

AVC

Average Variable Cost, calculated by dividing total variable costs by the quantity of output produced.

Short-Run Cost Curve

A curve that shows how production costs change as output is increased or decreased, assuming some inputs are fixed.

Profit Maximizing

The process of adjusting production and sale strategies to achieve the maximum possible profit.

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products sold by all firms, no barriers to entry or exit, and perfect information among buyers and sellers.