Brown,CPA,was Using Monetary Unit Sampling to Audit an Inventory of $3,000,000

question 102

Multiple Choice

Brown,CPA,was using monetary unit sampling to audit an inventory of $3,000,000 that was comprised of 6,000 items.A sample size of 500 was determined and a tolerable misstatement of $20,000 was established.The sampling interval would be:

• A)$500.
• B)$5,000.
• C)$6,000.
• D)$20,000.

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Definitions:

Game Theory

The study of how people behave in strategic situations in which individuals must take into account not only their own possible actions but also the possible reactions of others. Originally developed to analyze the best ways to play games like poker and chess.

Strategic Behavior

Self-interested economic actions that take into account the expected reactions of others.

Dominant Strategy

A strategy that always results in the highest payoff for a player, regardless of the opponents' actions.

Nash Equilibrium

The situation that occurs in some simultaneous games wherein every player is playing his or her dominant strategy at the same time and thus no player has any reason to change behavior.