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16 January, 01:50

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.

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Answers (1)
  1. 16 January, 02:12
    0
    What is the estimated total audited value of the population using the difference method?

    c. $201,000.

    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
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