Assume the following relating to a PPS sample:
• Projected Misstatement = $20,000.
• Basic Precision = $16,000.
• Incremental Allowance = $4,500.
• Tolerable Misstatement = $34,000.
The allowance for sampling risk is equal to:
A)$20,000.
B)20,500.
C)$40,500.
D)$74,500.

Question

Quizplus · Accepted Answer

The allowance for sampling risk is calculated as Basic Precision + Incremental Allowance, which in this case is $16,000 + $4,500 = $20,500. The projected misstatement is already taken into account with the tolerable misstatement of $34,000. Therefore, options A and C are not correct. Option D does not make sense as it is not related to any of the given information.

Assume the Following Relating to a PPS Sample