Use of the ratio estimation sampling technique to estimated dollar amounts is inappropriate when:
A) the total book value is known and corresponds to the sum of all the individual book values.
B) a book value for each sample item is unknown.
C) there are some observed differences between audited values and book values.
D) the audited values are nearly proportional to the book values.

Question

Quizplus · Accepted Answer

Ratio estimation requires that both the book value and the audited value for each sample item are known to calculate the ratio. If the book value for each sample item is unknown, ratio estimation cannot be applied.

Use of the Ratio Estimation Sampling Technique to Estimated Dollar