Question 1

The risk that the auditor concludes that a material misstatement exists when it does not is called _______.

Accepted Answer

A) risk of incorrect rejection 
B) risk of incorrect acceptance 
C) risk of incorrect statement 
D) risk of incorrect valuation 
A) risk of incorrect rejection 
B) risk of incorrect acceptance 
C) risk of incorrect statement 
D) risk of incorrect valuation A

Question 2

The common steps in any transaction stream are _______.

Accepted Answer

A) authorization 
B) executing the transaction 
C) recording the transaction, and transfer of consideration 
D) All of these answer choices are correct. 
A) authorization 
B) executing the transaction 
C) recording the transaction, and transfer of consideration 
D) All of these answer choices are correct. D

Question 3

In Mean per Unit (MPU) estimation, the sample size required to achieve specified statistical objectives _______.

Accepted Answer

A) is related directly to the variability of the values of the population items 
B) is not related to the variability of the values of the population items 
C) should be determined by specialists employed by the auditors 
D) should be determined by senior management and communicated to the auditor 
A) is related directly to the variability of the values of the population items 
B) is not related to the variability of the values of the population items 
C) should be determined by specialists employed by the auditors 
D) should be determined by senior management and communicated to the auditor A

Question 4

The choice of using audit sampling _______.

Accepted Answer

A) is a matter of determining which audit procedure will be most effective, and efficient in the circumstances 
B) is a matter of determining which audit procedure will be most cost effective, and efficient in the circumstances 
C) should be left to the internal auditors 
D) should be confirmed with senior management, before any procedures are undertaken 
A) is a matter of determining which audit procedure will be most effective, and efficient in the circumstances 
B) is a matter of determining which audit procedure will be most cost effective, and efficient in the circumstances 
C) should be left to the internal auditors 
D) should be confirmed with senior management, before any procedures are undertaken

Question 5

When conducting substantive tests, sampling risk is _______.

Accepted Answer

A) ignored, due to substantive tests providing a compensating control 
B) considered to be the risk that the random sample selected will be representative of the population 
C) the risk that an auditor concludes that a material misstatement does not exist when it actually does, or an auditor concludes that a material misstatement exists when it actually does not 
D) the risk that an auditor concludes that a material misstatement does exist when it actually does, or an auditor concludes that a material misstatement exists when it actually does not 
A) ignored, due to substantive tests providing a compensating control 
B) considered to be the risk that the random sample selected will be representative of the population 
C) the risk that an auditor concludes that a material misstatement does not exist when it actually does, or an auditor concludes that a material misstatement exists when it actually does not 
D) the risk that an auditor concludes that a material misstatement does exist when it actually does, or an auditor concludes that a material misstatement exists when it actually does not

Question 6

In which of the following sampling techniques does the auditor not use a formal statistical technique to select the sample or to evaluate the sample results?

Accepted Answer

A) Non-statistical sampling 
B) Statistical Sampling 
C) Monetary-unit sampling 
D) Block selection 
A) Non-statistical sampling 
B) Statistical Sampling 
C) Monetary-unit sampling 
D) Block selection

Question 7

In the given table, match the terms related to sampling on the left with their details on the right.

Accepted Answer

The risk of incorrect acceptance is the

Question 8

Smaller populations with fewer number of units _______.

Accepted Answer

A) should result in a larger sample size 
B) should result in a smaller sample size 
C) have no bearing on sample size 
D) should result in a smaller population size 
A) should result in a larger sample size 
B) should result in a smaller sample size 
C) have no bearing on sample size 
D) should result in a smaller population size

Question 9

Evaluating sample results involves making _______.

Accepted Answer

A) a quantitative assessment only in order to reach an overall conclusion 
B) a qualitative assessment only in order to reach an overall conclusion 
C) both a quantitative and a qualitative assessment of the results in order to reach an overall conclusion 
D) neither a quantitative or qualitative assessment in order to reach an overall conclusion 
A) a quantitative assessment only in order to reach an overall conclusion 
B) a qualitative assessment only in order to reach an overall conclusion 
C) both a quantitative and a qualitative assessment of the results in order to reach an overall conclusion 
D) neither a quantitative or qualitative assessment in order to reach an overall conclusion

Question 10

Systematic selection involves the selection of a population for testing by dividing the number of items in a population by the sample size, resulting in the sampling interval (n).

Accepted Answer

A) True 
 B)False

Question 11

It is critical to have accurate knowledge of the number of units in the population because _______.

Accepted Answer

A) this factor enters into the calculation of sample size only 
B) this factor enters into the calculation of both the sample size and sample results. 
C) this factor enters into the calculation of the sample results only 
D) this factor enters into neither the calculation of the sample size or the sample results. 
A) this factor enters into the calculation of sample size only 
B) this factor enters into the calculation of both the sample size and sample results. 
C) this factor enters into the calculation of the sample results only 
D) this factor enters into neither the calculation of the sample size or the sample results.

Question 12

The auditor may use a classical variables sampling approach in substantive testing.

Accepted Answer

A) True 
 B)False

Question 13

Most audit firms use _______.

Accepted Answer

A) statistical sampling only 
B) non-statistical sampling only 
C) a combination of statistical and non-statistical sampling 
D) neither statistical or non-statistical sampling 
A) statistical sampling only 
B) non-statistical sampling only 
C) a combination of statistical and non-statistical sampling 
D) neither statistical or non-statistical sampling

Question 14

Smaller amounts of _______ in the population will result in smaller sample sizes.

Accepted Answer

A) expected misstatement 
B) tolerable misstatement 
C) misstatement 
D) stratification of the population 
A) expected misstatement 
B) tolerable misstatement 
C) misstatement 
D) stratification of the population

Question 15

Lower training cost is a major advantage of _______.

Accepted Answer

A) non-statistical sampling 
B) statistical sampling 
C) random sampling 
D) systematic sampling 
A) non-statistical sampling 
B) statistical sampling 
C) random sampling 
D) systematic sampling

Question 16

The client's data is most reliable when internal controls are weak.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following are factors that influence the sample size when testing transactions and balances?

Accepted Answer

A) Stratification of the population 
B) The amount of expected misstatement in the population 
C) Tolerable misstatement 
D) Demographics 
A) Stratification of the population 
B) The amount of expected misstatement in the population 
C) Tolerable misstatement 
D) Demographics

Question 18

In the given table, match the details of sampling on the left with their explanations on the right.

Accepted Answer

Sampling is not required when an audit p

Question 19

Classical variables sampling is best described as:

Accepted Answer

A) A sampling method that uses normal distribution theory to select a sample and evaluate the characteristics of a population based on the results of a sample drawn from the population. 
B) A non-statistical sampling technique 
C) A procedure conducted by the internal auditors only 
D) A sampling technique only applied to receivables 
A) A sampling method that uses normal distribution theory to select a sample and evaluate the characteristics of a population based on the results of a sample drawn from the population. 
B) A non-statistical sampling technique 
C) A procedure conducted by the internal auditors only 
D) A sampling technique only applied to receivables

Question 20

Non-sampling risk is the risk that _______.

Accepted Answer

A) an auditor arrives at an inappropriate conclusion for a reason unrelated to sampling issues 
B) an auditor arrives at an inappropriate conclusion for a reason related to sampling issues 
C) the auditor inadvertently does not include any sampling procedures in the audit 
D) the audit firm does not send sample questionnaires to management related to certain note disclosures 
A) an auditor arrives at an inappropriate conclusion for a reason unrelated to sampling issues 
B) an auditor arrives at an inappropriate conclusion for a reason related to sampling issues 
C) the auditor inadvertently does not include any sampling procedures in the audit 
D) the audit firm does not send sample questionnaires to management related to certain note disclosures

The risk that the auditor concludes that a material misstatement exists when it does not is called _______.

The common steps in any transaction stream are _______.

In Mean per Unit (MPU) estimation, the sample size required to achieve specified statistical objectives _______.

The choice of using audit sampling _______.

When conducting substantive tests, sampling risk is _______.

In which of the following sampling techniques does the auditor not use a formal statistical technique to select the sample or to evaluate the sample results?

In the given table, match the terms related to sampling on the left with their details on the right.

Smaller populations with fewer number of units _______.

Evaluating sample results involves making _______.

Systematic selection involves the selection of a population for testing by dividing the number of items in a population by the sample size, resulting in the sampling interval (n).

It is critical to have accurate knowledge of the number of units in the population because _______.

The auditor may use a classical variables sampling approach in substantive testing.

Most audit firms use _______.

Smaller amounts of _______ in the population will result in smaller sample sizes.

Lower training cost is a major advantage of _______.

The client's data is most reliable when internal controls are weak.

Which of the following are factors that influence the sample size when testing transactions and balances?

In the given table, match the details of sampling on the left with their explanations on the right.

Classical variables sampling is best described as:

Non-sampling risk is the risk that _______.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Auditing the Revenue Cycle

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters

Exam 10: Risk Responseaudit Sampling for Substantive Testing

The risk that the auditor concludes that a material misstatement exists when it does not is called _______.

The common steps in any transaction stream are _______.

In Mean per Unit (MPU) estimation, the sample size required to achieve specified statistical objectives _______.

The choice of using audit sampling _______.

When conducting substantive tests, sampling risk is _______.

In which of the following sampling techniques does the auditor not use a formal statistical technique to select the sample or to evaluate the sample results?

In the given table, match the terms related to sampling on the left with their details on the right.

Smaller populations with fewer number of units _______.

Evaluating sample results involves making _______.

Systematic selection involves the selection of a population for testing by dividing the number of items in a population by the sample size, resulting in the sampling interval (n).

It is critical to have accurate knowledge of the number of units in the population because _______.

The auditor may use a classical variables sampling approach in substantive testing.

Most audit firms use _______.

Smaller amounts of _______ in the population will result in smaller sample sizes.

Lower training cost is a major advantage of _______.

The client's data is most reliable when internal controls are weak.

Which of the following are factors that influence the sample size when testing transactions and balances?

In the given table, match the details of sampling on the left with their explanations on the right.

Classical variables sampling is best described as:

Non-sampling risk is the risk that _______.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Auditing the Revenue Cycle

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters