Question 1

When performing a substantive test, _______.

Accepted Answer

A) the population consists of a transaction and the account balance to be tested 
B) the population consists of the class of transactions or the account balance to be tested 
C) the auditor should report all immaterial findings to management 
D) the auditor should withdraw from the engagement if any material misstatements are located 
A) the population consists of a transaction and the account balance to be tested 
B) the population consists of the class of transactions or the account balance to be tested 
C) the auditor should report all immaterial findings to management 
D) the auditor should withdraw from the engagement if any material misstatements are located

Question 2

Joe Cool, CPA is reviewing a sample of his client's accounts payable.Joe finds evidence that the account may be materially misstated.What are Joe's options?

Accepted Answer

Joe Cool's options are:
(1) increase the

Question 3

The _______ method includes both an estimate of the audited value of the population (or the amount of misstatements in the population) and an estimate of a statistical confidence interval, or allowance for sampling risk associated with the estimate.

Accepted Answer

statistical sampling
The statistical sam

Question 4

The most common selection method used in Probability Proportionate to Size (PPS) sampling is systematic selection.

Accepted Answer

A) True 
 B)False

Question 5

In _______ the auditor estimates the audited value of the population by adding the projected difference between audited value and book value of each strata to the book value of that strata.

Accepted Answer

difference method
In difference method t

Question 6

Which of the following defines a population from a sampling perspective?

Accepted Answer

A) It consists of a class of transactions, or the account balance to be tested. 
B) It consists of a subset of the class. 
C) It consists of a class that is overstated. 
D) None of the answer choices are correct. 
A) It consists of a class of transactions, or the account balance to be tested. 
B) It consists of a subset of the class. 
C) It consists of a class that is overstated. 
D) None of the answer choices are correct.

Question 7

An auditor can reduce the impact of variability by using _______.

Accepted Answer

A) indemnification 
B) stratification 
C) a variety of statistical techniques 
D) a variety of non-statistical techniques 
A) indemnification 
B) stratification 
C) a variety of statistical techniques 
D) a variety of non-statistical techniques

Question 8

An important aspect of selecting a sample _______.

Accepted Answer

A) involves determining the population and population unit 
B) involves determining the population and sampling unit 
C) is ensuring certain accounts are selected for audit 
D) is ensuring certain accounts are not selected for audit 
A) involves determining the population and population unit 
B) involves determining the population and sampling unit 
C) is ensuring certain accounts are selected for audit 
D) is ensuring certain accounts are not selected for audit

Question 9

High levels of assurance mean _______.

Accepted Answer

A) lower levels of sampling risk that the sample is not representative of the population 
B) higher levels of sampling risk that the sample is not representative of the population 
C) lower levels of non-sampling risk that the sample is not representative of the population 
D) higher levels of non-sampling risk that the sample is not representative of the population 
A) lower levels of sampling risk that the sample is not representative of the population 
B) higher levels of sampling risk that the sample is not representative of the population 
C) lower levels of non-sampling risk that the sample is not representative of the population 
D) higher levels of non-sampling risk that the sample is not representative of the population

Question 10

The choice of using audit sampling vs.audit data analytics (ADA) _______.

Accepted Answer

A) is typically left up to senior management 
B) is often a matter of what is most effective and efficient in determining whether an assertion is presented fairly, in all material respects 
C) is often a matter of what is most effective and efficient in determining whether a control is presented fairly, in all material respects 
D) should be determined by the client's legal counsel 
A) is typically left up to senior management 
B) is often a matter of what is most effective and efficient in determining whether an assertion is presented fairly, in all material respects 
C) is often a matter of what is most effective and efficient in determining whether a control is presented fairly, in all material respects 
D) should be determined by the client's legal counsel

Question 11

Sometimes an audit population may be sufficiently small so that_______.

Accepted Answer

A) the auditor can ignore the account in question 
B) the auditor can audit every item in the population 
C) the account in question can be outsourced to the internal audit function for auditing 
D) expressed written assurance from senior management pertaining to the account is satisfactory 
A) the auditor can ignore the account in question 
B) the auditor can audit every item in the population 
C) the account in question can be outsourced to the internal audit function for auditing 
D) expressed written assurance from senior management pertaining to the account is satisfactory

Question 12

Probability proportionate to size sampling _______.

Accepted Answer

A) should only be used in substantive testing of transactions 
B) should only be used in substantive testing of balances 
C) should not be used for substantive testing of transactions and balances 
D) can be used for substantive testing of transactions and balances 
A) should only be used in substantive testing of transactions 
B) should only be used in substantive testing of balances 
C) should not be used for substantive testing of transactions and balances 
D) can be used for substantive testing of transactions and balances

Question 13

The ultimate purpose of a substantive test is to _______.

Accepted Answer

A) ensure that all controls are functioning properly 
B) obtain absolute assurance that an assertion is presented fairly in all material respects 
C) obtain reasonable assurance that an assertion is presented fairly in all material respects 
D) guarantee that no error or fraud exists in the financial statements 
A) ensure that all controls are functioning properly 
B) obtain absolute assurance that an assertion is presented fairly in all material respects 
C) obtain reasonable assurance that an assertion is presented fairly in all material respects 
D) guarantee that no error or fraud exists in the financial statements

Question 14

In _______ the auditor estimates the audited value of the population (or each strata) based on a ratio of the audited value of the sample divided by the book value of the sample.

Accepted Answer

A) ratio method 
B) difference method 
C) statistical method 
D) populate method 
A) ratio method 
B) difference method 
C) statistical method 
D) populate method

Question 15

At the outset of substantive testing, the auditor needs to _______.

Accepted Answer

A) determine the population being tested 
B) the assertion or assertions being tested 
C) if the auditor is trying to estimate the total dollar value of the population, or the total amount of misstatement that might exist in the population 
D) All of these answer choices are correct. 
A) determine the population being tested 
B) the assertion or assertions being tested 
C) if the auditor is trying to estimate the total dollar value of the population, or the total amount of misstatement that might exist in the population 
D) All of these answer choices are correct.

Question 16

The population consists of _______.

Accepted Answer

A) all accounts in the client's chart of accounts 
B) the class of transactions or the account balance to be tested 
C) neither the class of transactions nor the account balance to be tested 
D) account balances only 
A) all accounts in the client's chart of accounts 
B) the class of transactions or the account balance to be tested 
C) neither the class of transactions nor the account balance to be tested 
D) account balances only

Question 17

Risk of incorrect rejection is defined as _______.

Accepted Answer

A) the risk that the auditor concludes that a material misstatement does not exist when it does exist 
B) the risk that the auditor concludes that a material misstatement exists when it does not exist 
C) the risk that an auditor incorrectly rejects a client 
D) the risk that management may reject the audit opinion issued by the auditor 
A) the risk that the auditor concludes that a material misstatement does not exist when it does exist 
B) the risk that the auditor concludes that a material misstatement exists when it does not exist 
C) the risk that an auditor incorrectly rejects a client 
D) the risk that management may reject the audit opinion issued by the auditor

Question 18

Audit sampling is when _______.

Accepted Answer

A) the auditor selects certain accounts to audit from the client's chart of accounts 
B) an auditor selects the total population 
C) an auditor selects less than 100% of a population 
D) a client requests a sample of accounts be audited 
A) the auditor selects certain accounts to audit from the client's chart of accounts 
B) an auditor selects the total population 
C) an auditor selects less than 100% of a population 
D) a client requests a sample of accounts be audited

Question 19

When performing a substantive test, _______.

Accepted Answer

A) the population consists of the class of transactions or the account balance to be tested 
B) the sample consists of the class of transactions or the account balance to be tested 
C) the auditor should confirm acceptance by senior management of the test 
D) the auditor should perform the test in conjunction with the internal audit function 
A) the population consists of the class of transactions or the account balance to be tested 
B) the sample consists of the class of transactions or the account balance to be tested 
C) the auditor should confirm acceptance by senior management of the test 
D) the auditor should perform the test in conjunction with the internal audit function

Question 20

Classical variables sampling uses _______.

Accepted Answer

A) normal distribution theory 
B) probability proportional to size theory 
C) non-statistical theories 
D) hypergeometric distribution theory 
A) normal distribution theory 
B) probability proportional to size theory 
C) non-statistical theories 
D) hypergeometric distribution theory

When performing a substantive test, _______.

Joe Cool, CPA is reviewing a sample of his client's accounts payable.Joe finds evidence that the account may be materially misstated.What are Joe's options?

The _______ method includes both an estimate of the audited value of the population (or the amount of misstatements in the population) and an estimate of a statistical confidence interval, or allowance for sampling risk associated with the estimate.

The most common selection method used in Probability Proportionate to Size (PPS) sampling is systematic selection.

In _______ the auditor estimates the audited value of the population by adding the projected difference between audited value and book value of each strata to the book value of that strata.

Which of the following defines a population from a sampling perspective?

An auditor can reduce the impact of variability by using _______.

An important aspect of selecting a sample _______.

High levels of assurance mean _______.

The choice of using audit sampling vs.audit data analytics (ADA) _______.

Sometimes an audit population may be sufficiently small so that_______.

Probability proportionate to size sampling _______.

The ultimate purpose of a substantive test is to _______.

In _______ the auditor estimates the audited value of the population (or each strata) based on a ratio of the audited value of the sample divided by the book value of the sample.

At the outset of substantive testing, the auditor needs to _______.

The population consists of _______.

Risk of incorrect rejection is defined as _______.

Audit sampling is when _______.

When performing a substantive test, _______.

Classical variables sampling uses _______.

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

When performing a substantive test, _______.

Joe Cool, CPA is reviewing a sample of his client's accounts payable.Joe finds evidence that the account may be materially misstated.What are Joe's options?

The _______ method includes both an estimate of the audited value of the population (or the amount of misstatements in the population) and an estimate of a statistical confidence interval, or allowance for sampling risk associated with the estimate.

The most common selection method used in Probability Proportionate to Size (PPS) sampling is systematic selection.

In _______ the auditor estimates the audited value of the population by adding the projected difference between audited value and book value of each strata to the book value of that strata.

Which of the following defines a population from a sampling perspective?

An auditor can reduce the impact of variability by using _______.

An important aspect of selecting a sample _______.

High levels of assurance mean _______.

The choice of using audit sampling vs.audit data analytics (ADA) _______.

Sometimes an audit population may be sufficiently small so that_______.

Probability proportionate to size sampling _______.

The ultimate purpose of a substantive test is to _______.

In _______ the auditor estimates the audited value of the population (or each strata) based on a ratio of the audited value of the sample divided by the book value of the sample.

At the outset of substantive testing, the auditor needs to _______.

The population consists of _______.

Risk of incorrect rejection is defined as _______.

Audit sampling is when _______.

When performing a substantive test, _______.

Classical variables sampling uses _______.

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