Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The auditor of AU Systems Inc. is using monetary unit sampling to estimate the Accounts Receivable balance at year end. The auditor determined the risk

The auditor of AU Systems Inc. is using monetary unit sampling to estimate the Accounts Receivable balance at year end. The auditor determined the risk of incorrect acceptance of 5% and used a table to find a reliability factor of 3.0. The auditor also determined a sampling interval of $4,000 based on the population book value and the sample size. Only one error was found in the sample. An account had an audited value equal to the first four digits of your AUID in $. This audited value was lower than the account's book value by an amount equal to the fourth through sixth digits of your AUID in $.
Required:
A. What is the projected misstatement? Show your work and round off your answer to the nearest dollar.
B. What is the upper limit on misstatement? Show your work.
C. If the tolerable misstatement for Accounts Receivable is $12,718, would you accept the population of Accounts Receivable to be materially correct? Answer yes or no and briefly explain.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ramji Balakrishnan, Konduru Sivaramakrishnan, Geoff B. Sprinkle

2nd edition

1118385381, 978-1118385388

More Books

Students also viewed these Accounting questions

Question

illustrate the different exchange rates regimes

Answered: 1 week ago