Question 1

Tests for rates of occurrence are appropriately used in all but which of the following situations?

Accepted Answer

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

Question 2

An increased sample size will always cause the population to be accepted.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

When errors are found in a sample, auditors in practice generally make the assumption:

Accepted Answer

A) of a 100% assumption for all errors. 
B) that the population errors are larger than the sample errors. 
C) that the population errors are smaller than the sample errors. 
D) that the actual sample errors are representative of the population errors. 
A) of a 100% assumption for all errors. 
B) that the population errors are larger than the sample errors. 
C) that the population errors are smaller than the sample errors. 
D) that the actual sample errors are representative of the population errors.

Question 5

An auditor using nonstatistical sampling cannot formally measure sampling error.

Accepted Answer

A) True 
 B)False

Question 6

Identify each of the seven factors that influence sample size for nonstatistical tests of details of balances, and state whether each factor is directly or inversely related to sample size.

Accepted Answer

Factors that influence sample size for n

Question 7

Which of the following conditions would lead to a larger sample size?

Accepted Answer

A) Larger tolerable misstatement 
B) Low inherent risk 
C) High control risk 
D) Smaller account balance 
A) Larger tolerable misstatement 
B) Low inherent risk 
C) High control risk 
D) Smaller account balance

Question 8

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 9

An auditor using nonstatistical sampling cannot formally measure sampling error and therefore must subjectively consider the possibility that the true population misstatement exceeds a tolerable amount.Which of the following factors should be considered by the auditor in making this assessment?

Accepted Answer

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

Question 10

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 11

The appropriate assumption to make regarding the overall percent of error in those population items containing an error is:

Accepted Answer

A) determined using random number tables. 
B) set after a quantitative analysis of client's internal control system. 
C) based on the auditor's personal judgment in the circumstances. 
D) based on statistical analysis using confidence limits. 
A) determined using random number tables. 
B) set after a quantitative analysis of client's internal control system. 
C) based on the auditor's personal judgment in the circumstances. 
D) based on statistical analysis using confidence limits.

Question 12

The risk of incorrect rejection is important only when there is a ________ cost to increasing the sample size.

Accepted Answer

A) high 
B) low 
C) moderate 
D) marginal 
A) high 
B) low 
C) moderate 
D) marginal

Question 13

When using nonstatistical sampling, the auditor must subjectively consider whether the true population misstatement exceeds a tolerable amount.This is done by considering five factors.One factor is the difference between the point estimate and tolerable misstatement.State the other four factors the auditor must consider.

Accepted Answer

Other factors the auditor must consider

Question 14

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

Question 15

Why do auditors find MUS appealing?

Accepted Answer

A) MUS increases the likelihood of selecting a balance of high and low dollar items. 
B) MUS is easy to use in the audit environment. 
C) MUS provides a nonstatistical, rather than a statistical, conclusion. 
D) When misstatements are found, MUS rarely produces bounds in excess of materiality. 
A) MUS increases the likelihood of selecting a balance of high and low dollar items. 
B) MUS is easy to use in the audit environment. 
C) MUS provides a nonstatistical, rather than a statistical, conclusion. 
D) When misstatements are found, MUS rarely produces bounds in excess of materiality.

Question 16

The method used to measure the estimated total error amount in a population when there is both a recorded value and an audited value for each item in the sample is:

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 17

Using statistical sampling to assist in verifying the year-end accounts payable balance, an auditor has accumulated the following data:  
Projecting the misstatement to the population, the auditor's estimate of year-end accounts payable balance would be:

Accepted Answer

A) $5,050,000. 
B) $5,125,000. 
C) $6,000,000. 
D) $6,150,000. 
A) $5,050,000. 
B) $5,125,000. 
C) $6,000,000. 
D) $6,150,000.

Question 18

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 19

The population standard deviation has a significant effect on the computed precision interval.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 17: Audit Sampling for Tests of Details of Balances

Tests for rates of occurrence are appropriately used in all but which of the following situations?

An increased sample size will always cause the population to be accepted.

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

When errors are found in a sample, auditors in practice generally make the assumption:

An auditor using nonstatistical sampling cannot formally measure sampling error.

Identify each of the seven factors that influence sample size for nonstatistical tests of details of balances, and state whether each factor is directly or inversely related to sample size.

Which of the following conditions would lead to a larger sample size?

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

An auditor using nonstatistical sampling cannot formally measure sampling error and therefore must subjectively consider the possibility that the true population misstatement exceeds a tolerable amount.Which of the following factors should be considered by the auditor in making this assessment?

When working with the different variables methods:

The appropriate assumption to make regarding the overall percent of error in those population items containing an error is:

The risk of incorrect rejection is important only when there is a ________ cost to increasing the sample size.

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

Why do auditors find MUS appealing?

The method used to measure the estimated total error amount in a population when there is both a recorded value and an audited value for each item in the sample is:

Using statistical sampling to assist in verifying the year-end accounts payable balance, an auditor has accumulated the following data: Projecting the misstatement to the population, the auditor's estimate of year-end accounts payable balance would be:

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

The population standard deviation has a significant effect on the computed precision interval.

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

The Demand for Audit and Other Assurance Services

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Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

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Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

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