Auditors May Select Every 20^th File Starting with the 5^th

question 97

Short Answer

Auditors may select every 20^th file starting with the 5^th file in the top drawer. Then, file numbers 25, 45, 65, 85, . . . are selected. This type of sampling is called ___________.

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Definitions:

Residual Income

The net operating income that an investment center earns above the minimum required return on its operating assets.

Average Operating Assets

The average value of the assets used in the day-to-day operations of a business, calculated over a certain period of time.

Sales

The total revenue generated from selling goods or services.

Variable Expenses

Costs that vary in direct proportion with the level of production or sales volume, such as raw materials and sales commissions.