IIA-CIA-PART2 Question #143: Real Exam Question with Answer & Explanation

The correct answer is D. $2100.000. To determine the projected misstatement for the population using ratio estimation, the following calculation can be used: Projected Misstatement=(Sample MisstatementSample Book Value)譖opulation Book ValueProjected Misstatement=(Sample Book ValueSample Misstatement )譖opulation Boo

Question

An internal auditor s examination of accounts receivable generates the following results: What is the projected misstatement for the population if ratio estimation is used?

Options

A$84,000
B$238,095
C$700,000
D$2100.000

Explanation

To determine the projected misstatement for the population using ratio estimation, the following calculation can be used: Projected Misstatement=(Sample MisstatementSample Book Value)譖opulation Book ValueProjected Misstatement=(Sample Book ValueSample Misstatement )譖opulation Book Sample Misstatement = $420,000 Sample Book Value = $12,000,000 Population Book Value = $20,000,000 Projected Misstatement=(420,00012,000,000)?0,000,000Projected Misstatement=(12,000,000420, 000 )?0,000,000 Projected Misstatement=0.035?0,000,000=700,000Projected Misstatement=0.035?0,000,000=700 ,000 Therefore, the projected misstatement is $700,000.

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