Which of the following components of the upper limit on misstatements will exist in all monetary unit sampling applications,even in those where no misstatements are found?
A)Basic allowance for sampling risk.
B)Computed allowance for sampling risk.
C)Incremental allowance for sampling risk.
D)Projected misstatement.

Question

Quizplus · Accepted Answer

The basic allowance for sampling risk is always present in the upper limit on misstatements calculation regardless of whether any actual misstatements are found in the sample or not. It is an inherent part of the statistical sampling process and represents the risk that a misstatement exists in the population that was not detected in the sample. The computed allowance for sampling risk and incremental allowance for sampling risk are only present if misstatements are found in the sample, while the projected misstatement is only present if there are actual misstatements found and projected to the entire population.

Which of the Following Components of the Upper Limit on Misstatements