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1. If a risk of incorrect acceptance of 15% is specified in the sample design,...

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Accounting

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1. If a risk of incorrect acceptance of 15% is specified in the sample design, the sampling interval is $2,000, and five misstatements are found as enumerated above, calculate:

  • Basic precision.
  • The incremental allowance for sampling risk.
  • The upper misstatement limit.

2. If tolerable misstatement were $50,000 and expected misstatement were $10,000, what conclusion would you reach based on your results in above?

AP10.8 (LO 8) Challenging Evaluating a PPS sample Assume the following misstatements were found in a PPS sample: Sample Item Book Value Audit Value $ 650 $ 585 540 1,900 2,200 2,800 1,650 2,660

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