Law,CPA is using nonstatistical sampling in his examination of Jye Company's accounts receivable.The recorded balance of Jye's accounts receivable was $750,000.Law selected a sample of customer accounts for examination,which were recorded at $50,000.Based on the responses received from accounts receivable confirmations,Law determined an audited value of $45,000 for the accounts receivable. If tolerable misstatement is $60,000,which of the following statements is not true?
A)The actual misstatement identified by Law is $5,000.
B)The estimated account balance would be $825,000.
C)Law would conclude that the account balance is not fairly stated,since the expected misstatement is greater than the tolerable misstatement.
D)Law is not able to provide a quantitative conclusion as to the exposure to the risk of incorrect acceptance.

Question

Quizplus · Accepted Answer

The estimated account balance should be calculated by projecting the sample misstatement to the entire population, not simply adding it to the recorded balance.

Law,CPA Is Using Nonstatistical Sampling in His Examination of Jye