While Performing an Audit of Accounts Payable,Clayton,CPA,is Using Variables Sampling

question 28

Multiple Choice

While performing an audit of accounts payable,Clayton,CPA,is using variables sampling to determine the audited value of the account based on selected purchase orders.Which of the following options is most likely to reduce the necessary sample size?

• A)A decrease in the level of tolerable misstatement.
• B)An increase in the expected level of misstatement.
• C)An increase in the variability of the size of accounts payable transactions.
• D)An increase in the necessary risk of incorrect acceptance.

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Definitions:

Monthly Sales

The total revenue generated from the sale of goods or services within a month.

Margin of Safety

The extent to which sales levels can fall before reaching the break-even point, serving as a cushion against financial loss.

Target Profit

The desired net income a firm aims to achieve within a specific time period.

Dollar Sales

The complete income derived from the sale of products or services, measured in units of currency.