Edwards has decided to use monetary- unit sampling in the audit of an entitys accounts receivable balance.
Question:
Edwards has decided to use monetary- unit sampling in the audit of an entity’s accounts receivable balance. Few, if any, misstatements of account balance overstatement are expected.
Required:
a. Identify the advantages of using monetary- unit sampling over classical variables sampling.
b. Calculate the sample size and the sampling interval Edwards should use for the following information:
Tolerable misstatement ..........$ 15,000
Expected misstatement .......... $ 6,000
Desired confidence level ........... 95%
Recorded amount of accounts receivable ...$ 300,000
c. Calculate the UML assuming that the following three misstatements were discovered in an MUSsample.
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Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Step by Step Answer:
a The advantages of MUS over classical variables sampling are as follows MUS is generally easier to use than is classical variables sampling The calcu...View the full answer
Auditing and Assurance Services A Systematic Approach
ISBN: 978-1259162343
9th edition
Authors: William Messier, Steven Glover, Douglas Prawitt
