ExpertMedium1 markMultiple Choice
CPA · Question 23 · Area III: Performing Procedures
In probability-proportional-to-size (PPS) sampling, which of the following accounts would have the HIGHEST probability of being selected?
In probability-proportional-to-size (PPS) sampling, which of the following accounts would have the HIGHEST probability of being selected?
Answer options:
A.
An account with a recorded balance of $10,000.
B.
An account with a recorded balance of $100,000.
C.
An account with a recorded balance of $0 (but should be $50,000).
D.
An account with a recorded balance of $5,000.
How to approach this question
Understand PPS mechanics: Chance of selection is proportional to dollar size. Zero balances have no chance.
Full Answer
B.An account with a recorded balance of $100,000.✓ Correct
An account with a recorded balance of $100,000.
In PPS, every dollar is a sampling unit. An account with $100,000 contains 100,000 sampling units, giving it the highest probability of selection compared to smaller balances.
Common mistakes
Thinking PPS is good for finding understatements (zero balances) - it is not.
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