Williams,CPA Intends to Use Probability-Proportional-To-Size Sampling $$\begin{array} { c c } \text { Book Value } & \text { Audited Value } \\\$ 50 & \$ 49 \\400 & 300 \\8,000 & 6,000\end{array}$$

question 2

Essay

Williams,CPA intends to use probability-proportional-to-size sampling.He has properly selected and audited a sample of 100 accounts receivable from his client's population of 3000 accounts.He calculated a sampling interval of $5,000 and the tolerable misstatement for the account is $40,000.He has the following table available: Williams also recalls that "basic precision" is equal to the appropriate reliability factor multiplied times the sampling interval.He wishes to accept a risk of incorrect acceptance of 10 percent.
He found that 97 of the 100 accounts in the sample were properly calculated.However,the following three errors existed: $$\begin{array} { c c } \text { Book Value } & \text { Audited Value } \\\$ 50 & \$ 49 \\400 & 300 \\8,000 & 6,000\end{array}$$ a.Calculate the projected misstatement.
b.Calculate the basic precision.
c.Calculate the incremental allowance.
d.Calculate the upper limit on misstatement.
e.Explain how the auditors would consider the results calculated above.

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Definitions:

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Innovative and effective methods or ideas to solve problems.

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A form of protest or collective action where individuals or groups refuse to do business with or buy products from a company that does business with another company engaged in objectionable practices.

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Picket Lines

A boundary established by workers on strike, particularly outside their place of employment, to protest against their employer's practices.