For a large population of cash disbursement transactions, Smith, CPA is testing controls by using attribute sampling techniques. Anticipating an expected deviation rate of 3 percent, Smith found from a table that the required sample size is 400 with a tolerable deviation rate of 5 percent and a desired confidence level of 95 percent. If Smith anticipated an expected deviation rate of only 2 percent but wanted to maintain the same tolerable deviation rate and confidence level, the sample size would be closest to:
A)200.
B)400.
C)533.
D)800.

Question

Quizplus · Accepted Answer

When the anticipated deviation rate decreases, the required sample size for attribute sampling also decreases, assuming the tolerable deviation rate and confidence level remain the same. Therefore, with a decrease from an anticipated deviation rate of 3 percent to 2 percent, the sample size would be smaller than 400, making 200 the closest option.

For a Large Population of Cash Disbursement Transactions, Smith, CPA