Tolerable misstatement is inversely related to sample size; that is, as tolerable misstatement increases, sample size decreases.

Question

Quizplus · Accepted Answer

This statement is true. When the tolerable misstatement increases, the level of assurance required to detect misstatement decreases, which means a smaller sample size can be used. On the other hand, if the tolerable misstatement is set very low, a larger sample size may be needed to obtain sufficient assurance.

Tolerable Misstatement Is Inversely Related to Sample Size; That Is