EBK AUDITING+ASSURANCE SERVICES
17th Edition
ISBN: 9780135171219
Author: ARENS
Publisher: PEARSON CO
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Chapter 17, Problem 26DQP
a.
To determine
Identify that each of the confirmation exceptions represents misstatements or not.
b.
To determine
State the total amount of misstatement in the accounts receivables population, ignore the sample risk.
c.
To determine
State the follow up actions to be considered if the population is not acceptable.
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Assume that you are preparing to confirm accounts receivable at December 31, 2025, which is one month prior to the fiscal year - end of January 31, 2026. The book value
of gross accounts receivable is $71,622, 804. Complete the following requirements related to the confirmation of receivables for Cloud 9 based on previous work and the
following information Required:a. Using PPS sampling, determine the sample size that you want to use for sending accounts receivable confirmations. You make the
following assumptions.You set tolerable misstatement for accounts receivable at $3,500,000. Expected misstatement = $750,000. Risk of incorrect acceptance = 37%.
Given these parameters: 1. What do you calculate for sample size? 2. What do you calculate for the sampling interval?
The accounting department of the client reports that the balance of Accounts Receivable is $210,000.
Using classical variable sampling, the auditor computes an estimated total population value of $216,500
and computed a 95% achieved allowance for sampling risk of +- $8,500. The auditor should conclude
that the accounts receivable balance is fairly stated.
on
Select one:
O a. False
Ob. True
I
ss.
Chapter 17 Solutions
EBK AUDITING+ASSURANCE SERVICES
Ch. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - Prob. 10RQ
Ch. 17 - Prob. 11RQCh. 17 - Prob. 12RQCh. 17 - Prob. 13RQCh. 17 - Prob. 14RQCh. 17 - Prob. 15RQCh. 17 - Prob. 16RQCh. 17 - Prob. 17RQCh. 17 - Prob. 18RQCh. 17 - Prob. 19RQCh. 17 - Prob. 20RQCh. 17 - Prob. 21.1MCQCh. 17 - Prob. 21.2MCQCh. 17 - Prob. 21.3MCQCh. 17 - Prob. 22.1MCQCh. 17 - Prob. 22.2MCQCh. 17 - Prob. 22.3MCQCh. 17 - Prob. 23.1MCQCh. 17 - Prob. 23.2MCQCh. 17 - Prob. 23.3MCQCh. 17 - Prob. 24.1MCQCh. 17 - Prob. 24.2MCQCh. 17 - Prob. 24.3MCQCh. 17 - Prob. 25DQPCh. 17 - Prob. 26DQPCh. 17 - Prob. 27DQPCh. 17 - Prob. 28DQPCh. 17 - Prob. 29DQPCh. 17 - Prob. 30DQPCh. 17 - Prob. 31DQPCh. 17 - Prob. 32DQPCh. 17 - Prob. 34DQPCh. 17 - Prob. 35DQP
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- Hardevarrow_forwardThe 1,500 accounts receivable of DEF Company have a total book value of $30,000. Bob Smith, Certified Public Accountant (CPA), has selected and audited a sample of 50 accounts with a total book value of $1,050. Using the difference estimation technique, Smith has properly estimated a projected misstatement of an overstatement of $3,000 for the entire population. The total audited value of Smith's sample is: Multiple Choice $900 $1,150 $850 $950arrow_forwardCarson Allister is performing a PPS application in the audit of Bird Company’s accounts receivable. Based on the acceptable level of the risk of incorrect acceptance of 5 percent and a tolerable misstatement of $120,000, Allister has calculated a sample size of 75 items and a sampling interval of $25,000. After examining the sample items, the following misstatements were identified: (Use Exhibit F.A.2.) Item Recorded Balance Audited Value 1 $35,000 $28,000 2 10,000 8,000 3 6,000 3,000 Required: Calculate the upper limit on misstatements for Bird Company’s accounts receivable.arrow_forward
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