Question

The auditors have sampled 50 accounts from a population of 1,000 accounts receivable. The sample items have a mean book value of $200 and a mean audited value of $203. The book value in the population is $198,000. What is the estimated total audited value of the population using the difference method?

a. $198,000.
b. $200,000.
c. $201,000.
d. $203,000.

Answer 1

• What is the estimated total audited value of the population using the difference method?

c. $201,000.

Step-by-step explanation:

The difference method works as follows:

We have a popuation of 1,000 accounts .

The sample items have a mean book of $200 and a mean audited value of $203

We have a difference of $3

This difference it's applied to the population of accounts and we get a value of $3,000 (1,000 accounts * $3)

As the book value in the population it's $198,000, we add the difference previously calculated of $3,000

So, we have $198,000 + $3,000 = $201,000