An auditor desired to test credit approval on 10,000 sales invoices processed during the year. The auditor designed a statistical sample that would provide 1 percent risk of assessing control risk too low for the assertion that not more than percent of the sales invoices lacked approval. The auditor estimated from previous experience that about 2 percent of the sales invoices lacked approval. A sample of 200 Invoices was examined, and 7 of them were lacking approval. The auditor then determined the computed upper deviation rate to be(8 percent. In the evaluation of this sample, the auditor decided to increase the level of the preliminary assessment of control risk because the: Multiple Choice O expected population deviation rate (7 percent) was more than the percentage of errors in the sample (3½ percent). expected population deviation rate (2½ percent) was less than the tolerable deviation rate (7 percent). tolerable deviation rate (7 percent) was less than the computed upper deviation rate (8 percent). computed upper deviation rate (8 percent) was more than the percentage of errors in the sample (3½ percent). 3.5
An auditor desired to test credit approval on 10,000 sales invoices processed during the year. The auditor designed a statistical sample that would provide 1 percent risk of assessing control risk too low for the assertion that not more than percent of the sales invoices lacked approval. The auditor estimated from previous experience that about 2 percent of the sales invoices lacked approval. A sample of 200 Invoices was examined, and 7 of them were lacking approval. The auditor then determined the computed upper deviation rate to be(8 percent. In the evaluation of this sample, the auditor decided to increase the level of the preliminary assessment of control risk because the: Multiple Choice O expected population deviation rate (7 percent) was more than the percentage of errors in the sample (3½ percent). expected population deviation rate (2½ percent) was less than the tolerable deviation rate (7 percent). tolerable deviation rate (7 percent) was less than the computed upper deviation rate (8 percent). computed upper deviation rate (8 percent) was more than the percentage of errors in the sample (3½ percent). 3.5
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![An auditor desired to test credit approval on 10,000 sales invoices processed during the year.
The auditor designed a statistical sample that would provide 1 percent risk of assessing control
risk too low for the assertion that not more than percent of the sales invoices lacked approval.
The auditor estimated from previous experience that about 22 percent of the sales invoices
lacked approval. A sample of 200 Invoices was examined, and 7 of them were lacking approval.
The auditor then determined the computed upper deviation rate to be 8 percent.
In the evaluation of this sample, the auditor decided to increase the level of the preliminary
assessment of control risk because the:
Multiple Choice
O
expected population deviation rate (7 percent) was more than the
percentage of errors in the sample (3½ percent).
expected population deviation rate (2½ percent) was less than the
tolerable deviation rate (7 percent).
tolerable deviation rate (7 percent) was less than the computed upper
deviation rate (8 percent).
computed upper deviation rate (8 percent) was more than the percentage
of errors in the sample (3½ percent).
3.5+](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fed569f9f-37e5-4826-b228-e95d4037b1cd%2F1e73df59-afbe-4b2a-af73-194da2e3a45b%2F3h2wjip_processed.jpeg&w=3840&q=75)
Transcribed Image Text:An auditor desired to test credit approval on 10,000 sales invoices processed during the year.
The auditor designed a statistical sample that would provide 1 percent risk of assessing control
risk too low for the assertion that not more than percent of the sales invoices lacked approval.
The auditor estimated from previous experience that about 22 percent of the sales invoices
lacked approval. A sample of 200 Invoices was examined, and 7 of them were lacking approval.
The auditor then determined the computed upper deviation rate to be 8 percent.
In the evaluation of this sample, the auditor decided to increase the level of the preliminary
assessment of control risk because the:
Multiple Choice
O
expected population deviation rate (7 percent) was more than the
percentage of errors in the sample (3½ percent).
expected population deviation rate (2½ percent) was less than the
tolerable deviation rate (7 percent).
tolerable deviation rate (7 percent) was less than the computed upper
deviation rate (8 percent).
computed upper deviation rate (8 percent) was more than the percentage
of errors in the sample (3½ percent).
3.5+
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