Audit Objectives, Materiality & Risk, Accounts Receivable, Sampling

a AU 200b AU 315c AU 500d AU 700e definition of independencea we would try to prove that the actual balance is greater than $3,075b we would try to prove that the actual balance is less than $3,075c we would try to prove that the actual balance equals $3,000d we would try to prove that the actual balance is less than $2,925e we would try to prove that the actual balance is greater than $2,925a we would try to prove that the actual balance is greater than $3,075b we would try to prove that the actual balance is less than $3,075c we would try to prove that the actual balance equals $3,000d we would try to prove that the actual balance is less than $2,925e we would try to prove that the actual balance is greater than $2,925a 4,000.00b 18,000.00c 81,000.00d 125,133.33e 126,697.50version R2D2 This is ABC the order of the questions differs with EFG and XYZBUS 425 NAME . . exam #2 Audit Objectives, Materiality & Risk, Accounts Receivable, Sampling May 8, 20181. FROM WHICH AUDIT OBJECTIVE WAS THE FOLLOWING PHRASE TAKEN?The objective of the auditor is to design and perform audit procedures that enable the auditor to obtain sufficient appropriate audit evidence 2. OVERSTATEMENT / UNDERSTATEMENT We are auditing accounts receivable with a $ 3,000 balance. We want to limit the risk the account is overstated by less than $75, to 10%.3. OVERSTATEMENT / UNDERSTATEMENT We are auditing accounts payable with a $ 3,000 balance. We wanto limit the risk the account is understated by less than $75, to 10%.4. PROJECTING ERROR TO THE POPULATION You are instructed that tolerable misstatement equals 5% The population you are sampling from contains 270 entries with a balance of $2,533,950. Your sample consistof 60 entries which have recorded balances totaling $563,100. Your sample contains errors totaling $18,000. Calculate the projected error from your sample results.270*545,100/60 = 2,452,950 – 2,533,950 = 81,000 projected error - overstate18,000 * 270/60 = 81,000 projected error - overstatement18,000 * 2,534,000/563,100= 81,000 projected error - overstatement5. PROJECTING ERROR TO THE POPULATION You are instructed that tolerable a 54,000.00 overstatementb 54,000.00 understatementc 243,000.00 overstatementd 243,000.00 understatemente 380,092.50 overstatementa 147.4 148 0.42 1.28b 334.4 335 1.28 1.28c 436.5 437 1.645 1.28d 552.3 553 1.645 1.645e 806.2 807 2.33 1.645version R2D2 This is ABC the order of the questions differs with EFG and XYZmisstatement equals 5% of the population you are sampling from contains 810 entries with a balance of $7,601,850. Your sample consists of 180 entries which have recorded balances totaling $1,689,300 and audited balances totaling $1,743,300. Calculate the projected error and indicate whether the book value is overstated or understated6. SAMPLE SIZE There are 4,000 items in the inventory with book value of $2,800,000. Tolerable error is 10% of book value. The estimated standard deviation of the population is 500. How large must your sampbe to limit ά-risk, the 'Risk of Incorrect Rejection' to 0.20 and β-risk, the 'Risk of Incorrect Acceptance' to 0.10.You have everything you need to calculate Tolerable Error, BUT you might need to think CV = μ + Zα/2* Sx/√n LL = 𝐵𝑉̅̅̅𝑉̅̅̅ - Zα/2* Sx/√n CV = LL μ + Zα/2* Sx/√n = 𝐵𝑉̅𝑉̅̅̅ - Zα/2* Sx/√n630 + 1.28* 500 / √n = 700 – 1.28*500 / √n1.28*500 / √n + 1.28* 500 / √n = 700 – 630 2.56* 500 / √n = 70 2.56* 500 / 70 = √n334.4 = n => 335