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17-27) You are planning to use nonstatistical samp...

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17-27) You are planning to use nonstatistical sampling to evaluate the results of accounts receivable confirmation for the Meridian Company. You have already performed tests of controls for sales, sales, returns and allowances, and cash receipts, and they are considered excellent. Because of the quality of the controls, you decide to use an acceptable risk of incorrect acceptance of 10%. There are 3,000 accounts receivable with a gross value of $6,900,000. The accounts are similar in size and will be treated as a single stratum. An overstament of understatement of more than $150,000 is considered material. Required: a. Calculate the required sample size. Assume your firm uses the following nonstatistical formula to determine sale size: Sample size = (Book value of population / Tolerable misstatement) x Assurance factor An assurance factor of 2 is used for a 10% ARIA.

 

Paper#2153 | Written in 18-Jul-2015

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