Question 1

If acceptable audit risk is increased,acceptable risk of incorrect acceptance should be

Accepted Answer

A) increased. 
B) reduced. 
C) unaffected. 
D) modified. 
A) increased. 
B) reduced. 
C) unaffected. 
D) modified.

Question 2

While performing a substantive test of details during an audit,the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated.Which of the following is the least likely auditor reaction to this discovery?

Accepted Answer

A) perform expanded audit tests in the relevant areas 
B) increase detection risk in the relevant areas 
C) increase the sample size 
D) take no action until tests of other audit areas are completed 
A) perform expanded audit tests in the relevant areas 
B) increase detection risk in the relevant areas 
C) increase the sample size 
D) take no action until tests of other audit areas are completed

Question 3

The auditor must do misstatement analysis to decide whether any modification of the audit risk model is needed.

Accepted Answer

A) True 
 B)False

Question 4

You are auditing Raji and Company.You discover an item of inventory with an audited value of $5,000 with a recorded amount of $3,000.If this is the only error you discover,the projected misstatement for the sample would be

Accepted Answer

A) $5,000. 
B) $2,000. 
C) $3,000. 
D) $4,000. 
A) $5,000. 
B) $2,000. 
C) $3,000. 
D) $4,000.

Question 5

Which of the following sampling plans would be designed to estimate a numerical measurement of a population,such as a dollar value?

Accepted Answer

A) numerical sampling 
B) discovery sampling 
C) attributes sampling 
D) variables sampling 
A) numerical sampling 
B) discovery sampling 
C) attributes sampling 
D) variables sampling

Question 6

Tolerable misstatement is used to

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 7

If the misstatement bound exceeds tolerable misstatement,the population is considered acceptable.

Accepted Answer

A) True 
 B)False

Question 8

If an auditor concludes that internal controls are likely to be effective,the preliminary assessment of control risk can be reduced,leading to which of the following impacts on the acceptable risk of incorrect acceptance?

Accepted Answer

A) The acceptable risk of incorrect acceptance will be reduced. 
B) The acceptable risk of incorrect acceptance will be increased. 
C) The acceptable risk of incorrect acceptance will be eliminated. 
D) The acceptable risk of incorrect acceptance will not be impacted. 
A) The acceptable risk of incorrect acceptance will be reduced. 
B) The acceptable risk of incorrect acceptance will be increased. 
C) The acceptable risk of incorrect acceptance will be eliminated. 
D) The acceptable risk of incorrect acceptance will not be impacted.

Question 9

When using audit sampling for tests of details of balances,the acceptable risk of overreliance must be determined.

Accepted Answer

A) True 
 B)False

Question 10

Acceptable audit risk and acceptable risk of incorrect acceptance are inversely related;that is,as AAR increases,ARIA decreases.

Accepted Answer

A) True 
 B)False

Question 11

An estimate of the largest likely overstatement in a population at a given ARIA,using monetary unit sampling is the

Accepted Answer

A) point estimates. 
B) precision intervals. 
C) confidence intervals. 
D) misstatement bound. 
A) point estimates. 
B) precision intervals. 
C) confidence intervals. 
D) misstatement bound.

Question 12

The word below that best explains the relationship between required sample size and the acceptable risk of incorrect acceptance is

Accepted Answer

A) inverse. 
B) direct. 
C) proportional. 
D) indeterminate. 
A) inverse. 
B) direct. 
C) proportional. 
D) indeterminate.

Question 13

Match between columns
                        Premises: a method of variables sampling in which the auditor estimates the population misstatement by multiplying the average misstatement in the sample by the total number of population items and also calculates sampling risk
a statistical sampling method that provides misstatement bounds expressed in monetary amounts
conclusions drawn from sample results based on knowledge of sampling distributions
the risk that the auditor is willing to take of accepting a balance as correct when the True misstatement in the balance exceeds the tolerable misstatement
sampling techniques for tests of details of balances that use the statistical inference processes
the risk that the auditor is willing to take of rejecting a balance as incorrect when it is not misstated by a material amount

Accepted Answer

The Answer of stratified sampling and probability proportional to size is...

Question 14

The auditor is concerned with the audited value rather than the misstatement amount of each item in the sample when using

Accepted Answer

A) difference estimation. 
B) mean-per-unit estimation. 
C) ratio estimation. 
D) monetary unit sampling. 
A) difference estimation. 
B) mean-per-unit estimation. 
C) ratio estimation. 
D) monetary unit sampling.

Question 15

Which balance-related audit objective cannot be assessed using monetary unit sampling?

Accepted Answer

A) accuracy 
B) completeness 
C) existence 
D) All of the above can be assessed using monetary unit sampling. 
A) accuracy 
B) completeness 
C) existence 
D) All of the above can be assessed using monetary unit sampling.

Question 16

Both sampling and nonsampling risks are associated with

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 17

When selecting a sample size for substantive tests of balances which factor,other factors being equal,would result in a larger sample?

Accepted Answer

A) a decrease in the tolerable misstatement 
B) small expected misstatements 
C) an increase in the tolerable misstatement 
D) an increase in the acceptable risk of incorrect acceptance 
A) a decrease in the tolerable misstatement 
B) small expected misstatements 
C) an increase in the tolerable misstatement 
D) an increase in the acceptable risk of incorrect acceptance

Question 18

The risk the auditor is willing to take of accepting a balance as correct when the True misstatement in the balance under audit is greater than the tolerable misstatement is

Accepted Answer

A) the upper bound. 
B) the tolerable risk. 
C) the acceptable risk of incorrect acceptance. 
D) the lower bound. 
A) the upper bound. 
B) the tolerable risk. 
C) the acceptable risk of incorrect acceptance. 
D) the lower bound.

Question 19

When using MUS,the projected misstatement is the percentage misstatement times the sampling interval.

Accepted Answer

A) True 
 B)False

Question 20

In monetary unit sampling,a sampling interval of 900 means that

Accepted Answer

A) every 900ᵗʰ item will be selected. 
B) every 900ᵗʰ dollar in the account will be sampled. 
C) expected misstatement is 900. 
D) tolerable misstatement is 900. 
A) every 900ᵗʰ item will be selected. 
B) every 900ᵗʰ dollar in the account will be sampled. 
C) expected misstatement is 900. 
D) tolerable misstatement is 900.

Exam 17: Audit Sampling for Tests of Details of Balances

If acceptable audit risk is increased,acceptable risk of incorrect acceptance should be

While performing a substantive test of details during an audit,the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated.Which of the following is the least likely auditor reaction to this discovery?

The auditor must do misstatement analysis to decide whether any modification of the audit risk model is needed.

You are auditing Raji and Company.You discover an item of inventory with an audited value of $5,000 with a recorded amount of $3,000.If this is the only error you discover,the projected misstatement for the sample would be

Which of the following sampling plans would be designed to estimate a numerical measurement of a population,such as a dollar value?

Tolerable misstatement is used to

If the misstatement bound exceeds tolerable misstatement,the population is considered acceptable.

If an auditor concludes that internal controls are likely to be effective,the preliminary assessment of control risk can be reduced,leading to which of the following impacts on the acceptable risk of incorrect acceptance?

When using audit sampling for tests of details of balances,the acceptable risk of overreliance must be determined.

Acceptable audit risk and acceptable risk of incorrect acceptance are inversely related;that is,as AAR increases,ARIA decreases.

An estimate of the largest likely overstatement in a population at a given ARIA,using monetary unit sampling is the

The word below that best explains the relationship between required sample size and the acceptable risk of incorrect acceptance is

The auditor is concerned with the audited value rather than the misstatement amount of each item in the sample when using

Which balance-related audit objective cannot be assessed using monetary unit sampling?

Both sampling and nonsampling risks are associated with

When selecting a sample size for substantive tests of balances which factor,other factors being equal,would result in a larger sample?

The risk the auditor is willing to take of accepting a balance as correct when the True misstatement in the balance under audit is greater than the tolerable misstatement is

When using MUS,the projected misstatement is the percentage misstatement times the sampling interval.

In monetary unit sampling,a sampling interval of 900 means that

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