A Primary Difference in Comparing the Resulting Misstatements Analyzed After

question 103

Multiple Choice

A primary difference in comparing the resulting misstatements analyzed after using statistical methods compared to those using non-statistical methods is that

• A)statistical methods determine the most likely misstatement while nonstatistical methods determine misstatements by projecting the misstatement found in the sample back to the population.
• B)statistical methods determine misstatements by projecting the misstatement found in the sample back to the population while nonstatistical methods determine the most likely misstatement.
• C)statistical methods take a multiple of the estimated misstatement while nonstatistical methods use precision to determine the upper limit.
• D)statistical methods ignore any sampling error as the probabilities have compensated for them while nonstatistical methods must utilize the sampling error in the projection of the upper limit.

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Definitions:

Operating Expense

Refers to the costs associated with the day-to-day operations of a business, excluding costs related to production.

Receivables

Amounts due to be paid to a company by its customers for goods or services delivered on credit terms.

Bad Debt Expense

The expense recognized when a business determines that an amount owed by a debtor is unlikely to be collected.

Specific Customer's Account

An account representing the transactions and outstanding balance related to a particular customer.