The audit team is using monetary unit sampling to examine an entity's accounts receivable balance,which is recorded at $500,000.The team has determined the tolerable misstatement to be $25,000,the risk of incorrect acceptance to be 5 percent,and the expected misstatement to be 2 percent.Using the monetary unit sampling Sample Size table,what is the appropriate sample size?
A)75
B)162
C)231
D)300

Question

Quizplus · Accepted Answer

The expected misstatement is 2% of $500,000, or $10,000. The tolerable misstatement is $25,000. The ratio of tolerable misstatement to expected misstatement is $25,000/$10,000 = 2.5. The risk of incorrect acceptance is 5%. Using the monetary unit sampling Sample Size table, the appropriate sample size is 162.

The Audit Team Is Using Monetary Unit Sampling to Examine