An auditor is planning the confirmation of accounts receivable. The total of debit balances in the aged trial balance of receivables is $4 million. The auditor has decided that the tolerable misstatement (basic precision) for this sampling application is $50 000, the risk of incorrect acceptance is five per cent and zero error is expected. There are 2500 customer balances. The auditor decides to use dollar-unit sampling and determines a sample size of 100. The sampling interval for dollar-unit sampling using the systematic selection method is approximately:
A) 50.
B) 200.
C) 1 000.
D) 40 000.

Question

Quizplus · Accepted Answer

The sampling interval is calculated by dividing the total book value of the population ($4 million) by the sample size (100), which results in $40,000.

An Auditor Is Planning the Confirmation of Accounts Receivable