The Accounting Department Reports That the Balance of Accounts Receivable

Multiple Choice

The accounting department reports that the balance of accounts receivable is $210,000.You are willing to accept that balance if audit sampling suggests it is within $15,000 of the actual balance.Using a classical variables sampling plan,you compute a 95% confidence interval of $208,000 to $225,000.You would therefore

A) not be able to determine the acceptability of the receivable balance.
B) accept the balance but with a lower level of confidence.
C) take a larger sample before totally rejecting the balance and requiring adjustments.
D) accept the $210,000 balance because the confidence interval is within the materiality limits.
The upper bound of the confidence interval is not greater than $15,000 above the recorded value of the account receivable balance.