In a classical variables sampling application,the auditor determines there is a 95 percent probability that the true (but unknown)value of an entity's accounts receivable is between $45,000 and $55,000.If the estimated population value is $50,000,the precision is
A)$10,000
B)$5,000
C)95 percent
D)5 percent

Question

Quizplus · Accepted Answer

Precision is the measure of how close the sample estimate is to the true population value. In this case, the estimated population value is $50,000 and we know that there is a 95% probability that the true population value is between $45,000 and $55,000. Therefore, the range of the possible true population values is $10,000. Since the estimated population value falls exactly in the middle of this range, the precision is equal to half of the range, which is $5,000. Therefore, the correct answer is B.

In a Classical Variables Sampling Application,the Auditor Determines There Is