Solo,CPA,performed a Nonstatistical Sampling Plan to Examine the Inventory Balances

question 49

Multiple Choice

Solo,CPA,performed a nonstatistical sampling plan to examine the inventory balances of Hope,Inc.and estimated the account balance by projecting the misstatement based on the number of items examined.In selecting her sample of 70 items,she used an expected misstatement of $40,000 and a tolerable misstatement of $65,000.The account balance consisted of 1,050 items totaling $1,200,000.The sample recorded balance was $80,000,and the audited value was $76,000.What conclusion did Solo draw regarding the account balance?

• A)Accept because the expected misstatement is less than the tolerable misstatement.
• B)Reject because the expected misstatement is greater than the expected misstatement.
• C)Accept because the expected misstatement is less than the expected misstatement.
• D)Reject because the expected misstatement is greater than the tolerable misstatement.

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Definitions:

Balanced Scorecard

A system for planning and managing strategy that ensures business processes are in harmony with the organization's goals and vision, facilitates better communication within and outside the organization, and assesses how well the organization is achieving its strategic objectives.

Strategic Objective

A planned goal that an organization strives to achieve to guide its long-term plans and align its resources.

Performance Metrics

Quantitative measures used to evaluate, compare, and track performance or production across different periods or against specific objectives.

Performance Targets

Specific goals set by a company or individual to measure progress and achievement over a period.