Why Is Appropriately Defining the Population So Important in a Sampling

question 82

Multiple Choice

Why is appropriately defining the population so important in a sampling application?

• A)To permit the appropriate number of sample items to be selected.
• B)To ensure that the appropriate audit procedures can be applied to sample items.
• C)To enhance the likelihood of obtaining a representative sample and meet the objective of the sampling application.
• D)To reduce the likelihood of failing to identify material misstatements in an account balance or class of transactions.

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Definitions:

Uncollectible Accounts

Accounts receivable that a company does not expect to collect and thus considers as a loss.

Effective Interest Rate

The real rate of interest earned or paid on an investment, loan, or other financial product adjusted for compounding over a given period.

Present Value

The value today of a future cash amount or series of payments, based on a particular rate of return.

Fair Value

The value received from selling an asset or the expense of transferring a liability in a regulated transaction among market players on the date of evaluation.