Question
1. What is the sample size? 2. What is the sample interval? 3. What is the largest value you can use for a random chart? Assume you are planning the confirmation of accounts receivable. There are 3000 customer accounts with a total book value of 3,251,768. Tolerable misstatement is set at $200,000, and expected misstatement is 60,000. The risk of incorrect acceptance is 10%, the ratio of expected to tolerable misstatement is 30%, and the ratio of tolerable misstatement to the population is 6.1% (round down to 3% for use in Exhibit 8.7)
Explanation / Answer
1. What is the sample size? 2. What is the sample interval? 3. What is the largest value you can use for a random chart? Assume you are planning the confirmation of accounts receivable. There are 3000 customer accounts with a total book value of 3,251,768. Tolerable misstatement is set at $200,000, and expected misstatement is 60,000. The risk of incorrect acceptance is 10%, the ratio of expected to tolerable misstatement is 30%, and the ratio of tolerable misstatement to the population is 6.1% (round down to 3% for use in Exhibit 8.7)