Rome,CPA Is Conducting a Classical Variables Sampling Application on a Client's

question 17

Essay

Rome,CPA is conducting a classical variables sampling application on a client's accounts receivable recorded at $3,000,000.These receivables are comprised of 5,000 customer accounts.Assume that Rome identified an acceptable level of the risk of incorrect acceptance of 5 percent,determined a sample size of 100,and confirmed the accounts with the client's customers.Rome's substantive procedures indicated that the average audited value was $590 per account.
a.Determine the sample estimate of the client's accounts receivable.
b.If the standard deviation of sample estimates is $30,calculate the precision.
c.Calculate the precision interval.

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Definitions:

Business Risk

The potential for losses or less-than-expected returns stemming from the economic, industry, or company-specific factors.

Property Insurance

Insurance that protects property from loss or damages.

Loss Or Damage

Refers to the negative impact, destruction, or impairment of value, function, or condition of property or goods.

Insurance Proceeds

The money received from an insurance company as a payout for claims made under an insurance policy.