Auditors Are Evaluating an Account with a Recorded Balance of $600,000

question 58

Multiple Choice

Auditors are evaluating an account with a recorded balance of $600,000 using classical variables sampling.Based on an allowable risk of incorrect acceptance of 5 percent,the auditors have determined the following: -Estimated account balance = $680,000
-Precision = $20,000
-Tolerable misstatement = $50,000
Which of the following best describes the auditors' decision and rationale for that decision?

• A)The auditors would accept the account balance as fairly stated,since the sample estimate falls outside of the precision interval.
• B)The auditors would conclude that the account balance is not fairly stated,since the sample estimate falls outside of the precision interval.
• C)The auditors would accept the account balance as fairly stated,since the difference between the lower bound of the precision interval and recorded balance exceeds the tolerable misstatement.
• D)The auditors would conclude that the account balance is not fairly stated,since the difference between the lower bound of the precision interval and recorded balance exceeds the tolerable misstatement.

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