Question

Which classical method uses both the audited and book values of items in the sample to obtain an estimated total audited value?

O discovery sampling
O ratio estimation sampling
O mean-per-unit estimation sampling
O probability-proportional-to-size sampling

Answer 1

Ratio estimation sampling is the classical method that uses both the audited and book values of items in the sample to obtain an estimated total audited value.

Step-by-step explanation:

The classical method that uses both the audited and book values of items in the sample to obtain an estimated total audited value is called ratio estimation sampling.

In ratio estimation sampling, the audited value and book value of each item in the sample are compared, and a ratio is calculated. This ratio is then used to estimate the audited value of the entire population.

For example, let's say you are auditing a company's inventory of computers. You select a sample of 20 computers and find that the audited value is $10,000 and the book value is $8,000. The ratio of audited value to book value is 10,000/8,000 = 1.25. You can then use this ratio to estimate the audited value of the entire population of computers in the company.