An Auditor Established a $60,000 Tolerable Misstatement for an Account

question 1

Multiple Choice

An auditor established a $60,000 tolerable misstatement for an account balance of $1,000,000.The auditor selected a sample of every twentieth item from the population of 1,000 items that represented the asset account balance and discovered overstatements of $3,700 and understatements of $200.Under these circumstances,the auditor most likely would conclude that

• A) there is an unacceptably high risk that the actual misstatements in the population exceed the tolerable misstatement because the total projected misstatement is more than the tolerable misstatement.
• B) there is an unacceptably high risk that the tolerable misstatement exceeds the sum of actual overstatements and understatements.
• C) the asset account is fairly stated because the total projected misstatement is less than the tolerable misstatement.
• D) the asset account is fairly stated because the tolerable misstatement exceeds the net of projected actual overstatements and understatements.
• Net overstatement is $3,500. Using difference projection, the mean misstatement per sampling unit is $70 ($3,500/50) and the projected misstatement is $70,000 ($70 × 1,000). The projected misstatement is larger than the tolerable (even before considering sampling risk).

Analyze and interpret philosophical texts and ideas, including those from critical rationalists and Aristotle.

Recognize the distinct ethical and philosophical perspectives in different cultures, specifically in Confucianism.

Distinguish between reasoning processes and the influence of emotions and self-interest on critical thinking.

Appreciate the role of empathy in critical thought and its application in ethical reasoning.

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Definitions:

Lemmatization

Content analysis procedure for grouping words according to a common dictionary definition.

Dictionary Definition

The meaning of a word or phrase as explained in a dictionary, providing a standard interpretation.

Content Analysis

A research technique for the objective, systematic, and quantitative analysis of communication content.

Coding Scheme

A structured set of codes used to standardize the classification of information, facilitating consistent data analysis across different datasets.