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CMA Intermediate · Corporate Accounting and Auditing · Application of Technology in Audit and Audit Trail

An auditor runs a journal-entry analytics test on 12,500 entries. Filters: (a) entries posted on Sundays or holidays: 600; (b) round-sum entries of ₹1,00,000 or multiples: 450; (c) entries meeting both (a) and (b): 150. The auditor decides to investigate entries meeting at least one criterion. How many entries will be investigated, and what percentage of the population is this?

The auditor investigates 900 entries, which is 7.2% of the population. Using union logic, 600 plus 450 minus the 150 overlap gives 900; dividing by 12,500 gives 7.2%. Simply adding 1,050 would double count the overlapping entries.

  1. A1,050 entries; 8.4%
  2. B900 entries; 7.2%Correct
  3. C1,200 entries; 9.6%
  4. D750 entries; 6.0%

Explanation

Entries meeting at least one criterion = 600 + 450 - 150 = 900 (the overlap must be counted once). Percentage = 900/12,500 = 7.2%. Adding 600 + 450 = 1,050 double counts the 150 overlapping entries (8.4%).

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