An accounting firm uses sampling methods in its client auditing processes. Accounts of a particular type are grouped together in a batch size of 25. The auditor is concerned about erroneous accounts escaping the auditing process. Sampling and auditing the accounts is time consuming and very expensive, and a random sample of size n = 5 is about the largest sample that can practically be used. How many erroneous accounts must be in the batch of accounts for a random sample of size n = 5 to have a probability of at least 0.50 containing the erroneous account?
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We have a batch of 25 accounts, and we want to find the number of erroneous accounts (let's call it x) such that a random sample of size 5 has a probability of at least 0.50 of containing at least one erroneous account. Show more…
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An accounting firm uses sampling methods in its client auditing processes. Accounts of a particular type are grouped together in a batch size of 25. The auditor is concerned about erroneous accounts escaping the auditing process. Sampling and auditing the accounts is time consuming and very expensive, and a random sample of size n = 5 is about the largest sample that can practically be used. Suppose that the batch of accounts contains one erroneous account. What is the probability that the sample that is selected contains the erroneous account?
Sri K.
An accounting firm uses sampling methods in its client auditing processes. Accounts of a particular type are grouped together in a batch size of 12. The auditor is concerned about erroneous accounts escaping the auditing process. Sampling and auditing the accounts is time consuming and very expensive, and a random sample of size n=5 is about the largest sample that can practically be used. Suppose that the batch of accounts contains three erroneous accounts. What is the probability that the random sample of size n=5 that is selected contains one or two erroneous accounts?
An auditor randomly samples 20 accounts receivable from among the 500 such accounts of a client's firm. The auditor lists the amount of each account and checks to see if the underlying documents comply with stated procedures. The data are recorded in the accompanying table (amounts are in dollars, $Y=$ yes, and $N=n o$ ). Estimate the total accounts receivable for the 500 accounts of the firm and place a bound on the error of estimation. Do you think that the average account receivable for the firm exceeds $\$ 250 ?$ Why?
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