Various Factors Influence the Sample Size for a Substantive Test

question 53

Multiple Choice

Various factors influence the sample size for a substantive test of details of an account balance.All other factors being equal,which of the following would lead to a larger sample size?

• A)Lower assessment of control risk.
• B)Greater reliance on analytical procedures.
• C)Smaller expected frequency of misstatements.
• D)Smaller measure of tolerable misstatement.

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Definitions:

Factory Overhead Applied

The allocation of overhead costs, such as utility and maintenance expenses, to the production process or products based on predetermined rates.

Actual Costs

Actual costs are the actual expenses incurred in the production or acquisition of goods and services, as opposed to estimated or budgeted costs.

Credit Balance

A balance that appears on the right side of an account, indicating that a company owes money or has a liability.

Process Cost Accounting System

An accounting system used to track and allocate costs of production by process or department, commonly employed in manufacturing environments with continuous, homogeneous outputs.