The client's trial balance has a balance of $410,000 for merchandise inventory.As the auditor you are willing to accept a balance that is within $20,000 of either side of the recorded balance.You compute a 95% confidence interval of $395,000 to $425,000.You could therefore:
A)reject the trial balance amount.
B)accept the trial balance amount.
C)increase the sample size to assure more precision.
D)use alternative audit procedures to satisfy yourself as to the correct balance.

Question

Quizplus · Accepted Answer

The computed confidence interval of $395,000 to $425,000 includes the recorded balance of $410,000. As the auditor is willing to accept a balance within $20,000 of either side of the recorded balance, the recorded balance falls within this range. Therefore, the auditor can accept the trial balance amount. There is no need to reject the trial balance amount, increase the sample size, or use alternative audit procedures in this case.

The Client's Trial Balance Has a Balance of $410,000 for Merchandise