In a classical variables sampling application,the auditor determines there is a 95 percent probability that the true (but unknown)value of an entity's accounts receivable is between $45,000 and $55,000.If the estimated population value is $50,000,the precision is
A) $10,000.
B) $5,000.
C) 95%.
D) 5%.

Question

Quizplus · Accepted Answer

Precision is the measure of how close the estimated value is to the true value. In this case, the estimated population value is $50,000, and the range within which the true value is expected to fall is between $45,000 and $55,000 with 95% probability. Therefore, the precision can be calculated as half the range of the expected values, i.e., (55,000 - 45,000) / 2 = $5,000. Thus, option B is the correct answer.

In a Classical Variables Sampling Application,the Auditor Determines There Is