Which of the following statements is not true with respect to the calculation of the upperlimit on misstatements?a. The tainting percentage is determined based on the difference between the recorded balance and the audited value.b. A separate incremental allowance for sampling risk is calculated for each misstatementdiscovered by the auditor.c. If no misstatements are detected, the basic allowance for sampling risk equals zero.d. The projected misstatement is determined by multiplying the sampling interval by thetainting percentage.
Which of the following statements is not true with respect to the calculation of the upperlimit on misstatements?a. The tainting percentage is determined based on the difference between the recorded balance and the audited value.b. A separate incremental allowance for sampling risk is calculated for each misstatementdiscovered by the auditor.c. If no misstatements are detected, the basic allowance for sampling risk equals zero.d. The projected misstatement is determined by multiplying the sampling interval by thetainting percentage.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Which of the following statements is not true with respect to the calculation of the upper
limit on misstatements?
a. The tainting percentage is determined based on the difference between the recorded balance and the audited value.
b. A separate incremental allowance for sampling risk is calculated for each misstatement
discovered by the auditor.
c. If no misstatements are detected, the basic allowance for sampling risk equals zero.
d. The projected misstatement is determined by multiplying the sampling interval by the
tainting percentage.
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