Roberts,CPA,decided to Use Monetary Unit Sampling in the Audit of a Client's

question 101

Essay

Roberts,CPA,decided to use monetary unit sampling in the audit of a client's accounts receivable balance.The recorded amount of the accounts receivable control account totaled $2,000,000 and consisted of approximately 5,000 accounts.Roberts established a tolerable misstatement of $100,000,a risk of incorrect acceptance of 5 percent,and an expected misstatement of $10,000.
a.Calculate the sample size.
b.Calculate the sampling interval.

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Definitions:

Chapter 11 Bankruptcy

Chapter 11 Bankruptcy is a legal process that allows businesses to reorganize their debts under the protection of the bankruptcy court, aiming to return to profitability while repaying creditors in an orderly fashion.

Reorganization Value

Reorganization Value is the estimated value of a company's assets during restructuring or bankruptcy proceedings, often used to assess the potential recovery for creditors and investors.

Unsecured Creditors

Creditors who have lent money without taking collateral, meaning they have no special claim on a debtor’s assets if the debtor fails to pay.

Total Assets

The sum of all resources owned by a company, valued at the time of the balance sheet creation.