If the Projected Misstatement Is Greater Than the Tolerable Misstatement,the

question 28

Multiple Choice

If the projected misstatement is greater than the tolerable misstatement,the auditor must

• A)give appropriate consideration to the sampling risk in the determination of whether the projected misstatement plus sampling risk is greater than the tolerable misstatement
• B)give appropriate consideration to the sampling risk in the determination of whether the projected misstatement plus sampling risk is less than the tolerable misstatement
• C)gather additional evidence to determine the amount of the material misstatement
• D)gather additional evidence to determine the amount of the actual tolerable misstatement

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Definitions:

Receivables Period

The receivables period is the average amount of time it takes for a company to receive payments owed by its customers for goods or services sold on credit.

Payables Period

The length of time a company takes to pay its invoices to suppliers, reflecting its payment policy's efficiency.

Accounts Receivable Balance

The sum total of debts customers have towards a company for delivered goods or services which have not been paid for yet.

Wholesale Cost

The price charged for a product by the wholesaler, which is typically lower than the retail price.