ExpertMedium1 markMultiple Choice
CPA · Question 47 · Area III: Performing Procedures
An auditor uses the 'ratio estimation' method for variables sampling. The book value of the population is $1,000,000. The sample has a book value of $100,000 and an audited value of $110,000. What is the point estimate of the audited value of the population?
An auditor uses the 'ratio estimation' method for variables sampling. The book value of the population is $1,000,000. The sample has a book value of $100,000 and an audited value of $110,000. What is the point estimate of the audited value of the population?
Answer options:
A.
$1,000,000.
B.
$1,100,000.
C.
$1,010,000.
D.
$900,000.
How to approach this question
Ratio Estimation Formula: (Sample Audited / Sample Book) * Population Book.
Full Answer
B.$1,100,000.✓ Correct
$1,100,000.
Ratio estimation projects the ratio of audited value to book value found in the sample to the entire population.
Common mistakes
Confusing Ratio Estimation with Difference Estimation.
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