If the Audit Team Established a Tolerable Rate of Deviation

question 66

Multiple Choice

If the audit team established a tolerable rate of deviation of 5%,an expected population deviation rate of 3%,and desired to control the risk of overreliance to 5%,what sample size would be appropriate in this situation?

• A)132 items.
• B)195 items.
• C)258 items.
• D)361 items.

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Definitions:

Sales Returns and Allowances

A reduction in sales revenue that occurs when customers return products or receive discounts for unsatisfactory goods.

Income Statement

A financial statement that shows a company's revenues, expenses, and profits over a specific period, providing insight into operational efficiency.

Periodic Inventory System

An accounting approach where inventory and cost of goods sold are calculated at set periods, rather than continuously.

Acquisition of Inventory

The process of obtaining goods or materials for sale or use, either through purchase or production.