Indicate How Each of the Following Conditions Affect Sample Size

question 57

Short Answer

Indicate how each of the following conditions affect sample size by using the letters I (increase),D (decrease),or N (no effect).For each condition,hold all other factors constant.
1____.Holmes is expecting more deviations in the population from prior years because the client has recently implemented a new transaction processing system.
2____.Holmes has been criticized for going over budget in the past so he has decreased the risk of underreliance from 15% to 5%.
3____.At the beginning of the period,the client hired a new accounting manager to oversee the implementation of policies and procedures relating to accurate and complete financial reporting.Holmes believes the new manager has helped decrease employee errors.
4____.Holmes has decided that the tolerable rate of deviation was set too low initially and should be increased slightly to better reflect the planned level of control risk.
5____.Holmes defined the population as all sales invoices found in the client's computerized listing.However,the first list he received did not include sales made during the last two weeks of the period.When an updated list was provided the population (which was already large)increased by 5%.
6____.The risk of overreliance has been decreased because Holmes wants to place more reliance on the controls being tested.
7____.Due to a change in firm policy,the tolerable rate of deviation has been decreased.

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Definitions:

Annual Donut Sales

The total revenue generated from selling donuts in a one-year period.

Straight-Line Depreciation

An approach for spreading out the cost of a material asset through its operational life in consistent annual payments.

Payback Period

The length of time it takes for an investment to generate enough cash flow to recover the initial outlay, used in capital budgeting to estimate the viability of projects.

Investment Project

A project undertaken by a business or individual involving the allocation of capital resources to increase future earnings.