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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Definitions:

Largest Group

The group or category within a set that has the highest number of members or elements.

Physical Attractiveness

The degree to which a person's physical features are considered aesthetically pleasing or appealing.

Casual Relationship

A casual relationship is a romantic or sexual relationship between individuals without the expectation of commitment or exclusivity.

Reproductive Capacity

The ability of an individual or species to produce offspring, encompassing all biological functions related to reproduction.