Auditing & Assurance Services
Auditing & Assurance Services
6th Edition
ISBN: 9780077862343
Author: LOUWERS, Timothy J.
Publisher: Mcgraw-hill Education,
Question
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Chapter E, Problem 70EP

a.

To determine

Identify the factors that will influence the decision made by Mr. F in using sampling method.

b.

To determine

Describe the merits and demerits of using sampling method in this circumstance.

c.

To determine

Describe a sampling risk and explain the two different results that better reflect the exposure of Mr. F to sampling risk and give reasons for the results out of the two that will concern Mr. F the most.

d.

To determine

Give reasons that would influence the decision of Mr. F with respect to the potential sampling risk from the two outcomes if the initial investment is $10,000 instead of $150,000.

e.

To determine

Describe a non-sampling risk and explain the potential non-sampling risks that Mr. F may face in his sampling process.

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Explanation: Question:A company has the following information: Beginning Inventory: $50,000Purchases: $120,000Ending Inventory: $60,000The company uses the periodic inventory system. What is the cost of goods sold (COGS) for the period?
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