The Accounting Department Reports That the Balance of Accounts Receivable

question 9

Multiple Choice

The accounting department reports that the balance of accounts receivable is $210,000.You are willing to accept that balance if audit sampling suggests it is within $15,000 of the actual balance.Using a classical variables sampling plan,you compute a 95% confidence interval of $208,000 to $225,000.You would therefore

• A) Not be able to determine the acceptability of the receivable balance.
• B) Accept the balance but with a lower level of confidence.
• C) Take a larger sample before totally rejecting the balance and requiring adjustments.
• D) Accept the $210,000 balance because the confidence interval is within the materiality limits.

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