Question 1

The larger the sample size,the more confident the auditor can be that the point estimate is close to the True population value.

Accepted Answer

A) True 
 B)False

Question 2

When making statistical inferences,the auditor must remember that

Accepted Answer

A) the True population value must always be known. 
B) auditors can state the conclusions drawn from a confidence interval in different ways. 
C) there can be no possibility that the sample is not sufficiently representative of the population. 
D) the knowledge of sampling distributions does not help the auditors to draw statistical conclusions. 
A) the True population value must always be known. 
B) auditors can state the conclusions drawn from a confidence interval in different ways. 
C) there can be no possibility that the sample is not sufficiently representative of the population. 
D) the knowledge of sampling distributions does not help the auditors to draw statistical conclusions.

Question 3

Difference estimation frequently results in smaller sample sizes than any other variables sampling method.

Accepted Answer

A) True 
 B)False

Question 4

PPS samples can be obtained in an efficient manner using all but which of the following?

Accepted Answer

A) hand selection by the auditor 
B) computer software 
C) random number tables 
D) systematic sampling techniques 
A) hand selection by the auditor 
B) computer software 
C) random number tables 
D) systematic sampling techniques

Question 5

Acceptable risk of incorrect acceptance (ARIA)and sample size are inversely related;that is,as ARIA increases,sample size decreases.

Accepted Answer

A) True 
 B)False

Question 6

In estimating the population misstatement,the first step in projecting from the sample to the population is to

Accepted Answer

A) make a point estimate. 
B) revise the upper error bound. 
C) calculate the precision interval. 
D) determine the population mean. 
A) make a point estimate. 
B) revise the upper error bound. 
C) calculate the precision interval. 
D) determine the population mean.

Question 7

Auditors should attempt to minimize ARIA and maximize ARIR.

Accepted Answer

A) True 
 B)False

Question 8

Acceptable risk of incorrect rejection is the statistical risk that the auditor has concluded that a population is materially misstated when it is not.

Accepted Answer

A) True 
 B)False

Question 9

You are auditing Nelson and Company and determined that the sample results support a conclusion that the account is materially misstated,when in fact it was not misstated.This illustrates the risk of

Accepted Answer

A) incorrect acceptance. 
B) incorrect rejection. 
C) control risk too low. 
D) control risk too high. 
A) incorrect acceptance. 
B) incorrect rejection. 
C) control risk too low. 
D) control risk too high.

Question 10

The primary factor affecting the auditor's decision about acceptable risk of incorrect acceptance (ARIA)is assessed inherent risk.

Accepted Answer

A) True 
 B)False

Question 11

Discuss each of the six possible courses of action the auditor can take when he or she has concluded that the population is misstated by more than a tolerable amount.

Accepted Answer

The six possible courses of action the a

Question 12

The auditor must consider the possibility that the True population misstatement is greater than the amount of misstatement that is tolerable when the auditor is performing

Accepted Answer

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

Question 13

When working with the different variables methods,

Accepted Answer

A) difference estimation frequently results in larger sample sizes than any other method. 
B) ratio estimation is the method preferred by most auditors since it is simpler to calculate confidence intervals. 
C) the difference between the mean-per-unit estimate and the difference estimate is the definition of what is being measured. 
D) stratification can only be used with difference estimation. 
A) difference estimation frequently results in larger sample sizes than any other method. 
B) ratio estimation is the method preferred by most auditors since it is simpler to calculate confidence intervals. 
C) the difference between the mean-per-unit estimate and the difference estimate is the definition of what is being measured. 
D) stratification can only be used with difference estimation.

Question 14

An auditor is confirming a population of accounts receivable for monetary correctness.The population totals $2,000,000 and a sample of 200 confirmations is obtained.Upon audit,no misstatements are uncovered in the sample.Assuming an ARIA of 10%,the confidence factor would be 2.31.Applied to a sampling interval of $10,000,the upper misstatement bound is calculated as

Accepted Answer

A) $462. 
B) $4,329. 
C) $23,100. 
D) $865,801. 
A) $462. 
B) $4,329. 
C) $23,100. 
D) $865,801.

Question 15

Which of the following does not have to be considered in determining the initial sample size of a test of details?

Accepted Answer

A) tolerable misstatement 
B) acceptable risk of incorrect rejection 
C) estimate of misstatements in the population 
D) inherent risk 
A) tolerable misstatement 
B) acceptable risk of incorrect rejection 
C) estimate of misstatements in the population 
D) inherent risk

Question 16

Explain acceptable risk of incorrect acceptance and acceptable risk of incorrect rejection within the context of variables sampling.

Accepted Answer

After an audit test is performed and sta

Question 17

If no exceptions were found in the substantive tests of transactions,

Accepted Answer

A) ARIA would stay the same. 
B) the sample size would stay the same. 
C) ARIA would increase. 
D) the sample size would increase. 
A) ARIA would stay the same. 
B) the sample size would stay the same. 
C) ARIA would increase. 
D) the sample size would increase.

Question 18

Which of the following is not a type of statistical method that provides results in dollar terms?

Accepted Answer

A) variables sampling 
B) attributes sampling 
C) monetary unit sampling 
D) sampling with probability proportional to size 
A) variables sampling 
B) attributes sampling 
C) monetary unit sampling 
D) sampling with probability proportional to size

Question 19

If a population is not considered acceptable,and the analysis indicates an individual error is unique or most of the misstatements are of a specific type,it may be appropriate to restrict the additional audit effort to the problem area.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not a problem with monetary unit selection?

Accepted Answer

A) population items with a zero recorded balance 
B) population items that should have a zero balance but do not 
C) accounts with negative balances 
D) accounts with small recorded balances that are significantly understated 
A) population items with a zero recorded balance 
B) population items that should have a zero balance but do not 
C) accounts with negative balances 
D) accounts with small recorded balances that are significantly understated

Exam 17: Audit Sampling for Tests of Details of Balances

The larger the sample size,the more confident the auditor can be that the point estimate is close to the True population value.

When making statistical inferences,the auditor must remember that

Difference estimation frequently results in smaller sample sizes than any other variables sampling method.

PPS samples can be obtained in an efficient manner using all but which of the following?

Acceptable risk of incorrect acceptance (ARIA)and sample size are inversely related;that is,as ARIA increases,sample size decreases.

In estimating the population misstatement,the first step in projecting from the sample to the population is to

Auditors should attempt to minimize ARIA and maximize ARIR.

Acceptable risk of incorrect rejection is the statistical risk that the auditor has concluded that a population is materially misstated when it is not.

You are auditing Nelson and Company and determined that the sample results support a conclusion that the account is materially misstated,when in fact it was not misstated.This illustrates the risk of

The primary factor affecting the auditor's decision about acceptable risk of incorrect acceptance (ARIA)is assessed inherent risk.

Discuss each of the six possible courses of action the auditor can take when he or she has concluded that the population is misstated by more than a tolerable amount.

The auditor must consider the possibility that the True population misstatement is greater than the amount of misstatement that is tolerable when the auditor is performing

When working with the different variables methods,

Which of the following does not have to be considered in determining the initial sample size of a test of details?

Explain acceptable risk of incorrect acceptance and acceptable risk of incorrect rejection within the context of variables sampling.

If no exceptions were found in the substantive tests of transactions,

Which of the following is not a type of statistical method that provides results in dollar terms?

If a population is not considered acceptable,and the analysis indicates an individual error is unique or most of the misstatements are of a specific type,it may be appropriate to restrict the additional audit effort to the problem area.

Which of the following is not a problem with monetary unit selection?

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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