Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 17, Problem 22.3MCQ
To determine
Indicate the acceptable scenario.
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You are testing your client's allowance, recorded at $1,500,000, with a monetay unit sample. The
following results are at a 2-sided confidence level of 90%.
Lower confidence limit
$1,200,000 uncollectible
Upper confidence limit
$1,900,000 uncollectible
Max. tol. misstatement:
$500,000
The client already has a previously recognized a $1.500.000 allowance for uncollectibles
recorded.
Which of the following would be a materially correct DR or CR adjustment amount?
a.
DR Allowance $500,000
CR Allowance $500,000
No adjustment needed.
CR Allowance
$1,550,000
b.
d:
A financial analyzer believes that the proportion of investors who are risk-averse (that is, try to avoid risk in their investment decisions) is at least 0.7. A sur-vey of 32 investors found that 20 of them were risk-averse. Formulate a one-sample hypothesis solution for a proportion to asses this belief.
(Answer on Excel)
2) What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
3) What was the average risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Chapter 17 Solutions
Auditing And Assurance Services
Ch. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - Prob. 10RQ
Ch. 17 - Prob. 11RQCh. 17 - Prob. 12RQCh. 17 - Prob. 13RQCh. 17 - Prob. 14RQCh. 17 - Prob. 15RQCh. 17 - Prob. 16RQCh. 17 - Prob. 17RQCh. 17 - Prob. 18RQCh. 17 - Prob. 19RQCh. 17 - Prob. 20RQCh. 17 - Prob. 21.1MCQCh. 17 - Prob. 21.2MCQCh. 17 - Prob. 21.3MCQCh. 17 - Prob. 22.1MCQCh. 17 - Prob. 22.2MCQCh. 17 - Prob. 22.3MCQCh. 17 - Prob. 23.1MCQCh. 17 - Prob. 23.2MCQCh. 17 - Prob. 23.3MCQCh. 17 - Prob. 24.1MCQCh. 17 - Prob. 24.2MCQCh. 17 - Prob. 24.3MCQCh. 17 - Prob. 25DQPCh. 17 - Prob. 26DQPCh. 17 - Prob. 27DQPCh. 17 - Prob. 28DQPCh. 17 - Prob. 29DQPCh. 17 - Prob. 30DQPCh. 17 - Prob. 31DQPCh. 17 - Prob. 32DQPCh. 17 - Prob. 34DQPCh. 17 - Prob. 35DQP
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- Assume that an account with a recorded balance of $5,000 has an audited value of $3,000. By using monetary unit sampling, if the sampling interval is $1,500, the projected misstatement would bea. $600.b. $900.c. $2,000.d. $3,000.arrow_forwardI would like to know how to answer this using a Financial Calculator, what are the values? N=, I/Y=, PV=, FV=, PMT=, C/Y=, P/Y=, and BGN/END. I tried the answers %15.85 for a) and 80.13% for b and they were incorrect.arrow_forwardAssume that you have selected a random sample of 15 checks from a population of 800 checks. The checks you have selected are the following numbers: 664, 789, 650, 136, 365, 538, 800, 657, 110, 136, 398, 645, 214, 544, and 777. Based on this sample, evaluate the truth of the following statements regarding your findings. Describe why you feel each statement is true or false. a. You have determined that Check No. 365 was not properly signed and was paid to a fictitious vendor. You conclude that fraud exists in the population. b. You have determined that no fraud exists in the sample of 15 checks you evaluated. You conclude that no fraud exists in the population.arrow_forward
- a risk manager gathers the following sample data to analyze annual returns for an asset: 12%, 25% and -1%. he wants to compute the best unbiased estimator of the true population mean and standard deviation. the manager's estimate of the standard deviation for this asset should be closest to a. 0.0111 b. 0.0113 c. 0.1054 d. 0.1204.arrow_forwardConsider the following results of a logistic regression from the lecture video of credit card default: coefficient Intercept -10.65 Balance 0.0055 For a balance of $2,500, the conditional probability of default is O 0.9852 O 0.8808 O 0.8100 O 0.9276 0.9569arrow_forwardOther factors equal when planning a monetary unit sample, which of the following is true regarding the maximum tolerable misstatement (M)? a. M is based on the sample results. b. the larger M is, the lower the confidence. c. the larger M is, the smaller the sample. d. the larger the expected misstatement, the smaller M is.arrow_forward
- a. Using the data in the table below alculate the following performance measures.i. Sharpe ratioii. Treynor measureiii. Jensen’s alphaiv. M-squared measurev. T-squared measure, andvi. Appraisal ratio (information ratio) Fund Average return Standard Deviation Beta coefficient Unsystematic Risk A 0.240 0.220 0.800 0.017 B 0.200 0.170 0.900 0.450 C 0.290 0.380 1.200 0.074 D 0.260 0.290 1.100 0.026 E 0.180 0.400 0.900 0.121 F 0.320 0.460 1.100 0.153 G 0.250 0.190 0.700 0.120 Market 0.220 0.180 1.000 0.000 Risk free return 0.050 0.000 b. Out of the performance measures you calculated in part a., which one would you use undereach of the following circumstances:i. You want to select one of the funds as your risky portfolio.ii. You want to select one of the funds to be mixed with the rest of your portfolio,currently composed solely of holdings in the market-index fund.iii. You want to select one of the funds to form an actively managed stock portfolioarrow_forwardA component of an account balance has a recorded balance of $10,000 and an audited valueof $8,000. By using monetary unit sampling, if the sampling interval is $20,000, the projected misstatement would bea. $2,000.b. $4,000.c. $5,000.d. $10,000.arrow_forwardcalculate the following Sharpe Ratio (SP) Treynor Measure Jensen Measure M2 measure T2 measure Information Ratio (appraisal ratio) Fund Average return Standard Deviation Beta coefficient Unsystematic Risk A 0.240 0.220 0.800 0.017 B 0.200 0.170 0.900 0.450 C 0.290 0.380 1.200 0.074 D 0.260 0.290 1.100 0.026 E 0.180 0.400 0.900 0.121 F 0.320 0.460 1.100 0.153 G 0.250 0.190 0.700 0.120 Market 0.220 0.180 1.000 0.000 Risk free return 0.050 0.000arrow_forward
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