The use of the ratio projection is most effective when
A) The dollar amount of the misstatement is expected to relate to the dollar amount of items tested.
B) A small number of differences exist in the population.
C) Estimating populations whose records consist of quantities but not book values.
D) Large understatement differences exist in the population.

Question

Quizplus · Accepted Answer

The ratio projection method is most effective when the dollar amount of the misstatement is expected to relate to the dollar amount of items tested. This means that the ratio of the misstatement in the sample can be applied to the entire population because the misstatement is expected to be proportional to the total dollar amount of the population.

The Use of the Ratio Projection Is Most Effective When