Use of the ratio estimation sampling technique to estimate dollar amounts is inappropriate when:
A)The total book value is known and corresponds to the sum of all the individual book values.
B)A book value for each sample item is unknown.
C)There are some observed differences between audited values and book values.
D)The audited values are nearly proportional to the book value.

Question

Quizplus · Accepted Answer

Ratio estimation relies on the relationship between the book values and the audited (or actual) values of items in a sample. If a book value for each sample item is unknown, this technique cannot be applied because the ratio (or relationship) between the book and audited values cannot be established.

Use of the Ratio Estimation Sampling Technique to Estimate Dollar