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

Stratified sampling is applicable to difference, mean-per-unit, and ratio estimation, but it is most commonly used with:

Accepted Answer

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

Question 3

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 4

Acceptable risk of incorrect acceptance is directly affected by acceptable audit risk.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Discuss the advantages and disadvantages of monetary-unit sampling over other sampling methods.

Accepted Answer

Advantages of monetary unit sampling:
•I

Question 7

Tolerable misstatement is used to:

Accepted Answer

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

Question 8

For stratified sampling, the auditor selects samples independently from each stratum.

Accepted Answer

A) True 
 B)False

Question 9

As the amount of misstatements expected in the population approaches tolerable misstatement, the planned sample size will:

Accepted Answer

A) decrease. 
B) increase. 
C) vary based on characteristics of the population. 
D) be unaffected. 
A) decrease. 
B) increase. 
C) vary based on characteristics of the population. 
D) be unaffected.

Question 10

The auditor must deal with layers of the computed upper deviation rate from the attributes table because there are different error assumptions for each error.Assume a sample of 100 had found one error, and the computed upper deviation rate is shown in the following table:  
The precision limit for the layer with one error is:

Accepted Answer

A) 2)3%. 
B) 3)8% 
C) 6)1%. 
D) 1)5%. 
A) 2)3%. 
B) 3)8% 
C) 6)1%. 
D) 1)5%.

Question 11

The use of monetary unit sampling is most appropriate when the auditor expects to find many errors and when a monetary result is desired.

Accepted Answer

A) True 
 B)False

Question 12

When auditors apply MUS to a sample, the sample is selected using random sampling techniques.

Accepted Answer

A) True 
 B)False

Question 13

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 14

MUS has the statistical simplicity of attributes sampling, yet provides a statistical result expressed as a percentage.

Accepted Answer

A) True 
 B)False

Question 15

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 16

The auditor is concerned with the audited value rather than the error 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 17

Explain the decision rule used in monetary unit sampling to determine whether the population is acceptable.

Accepted Answer

The results are considered acceptable if

Question 18

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 not materially misstated.It was, in fact, materially misstated.This situation illustrates the risk of:

Accepted Answer

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

Question 19

Match between columns
                        Premises: Sampling techniques for tests of details that use the statistical inference processes.
A statistical sampling method that provides upper and lower misstatement bounds expressed in monetary amounts.
The risk that the auditor is willing to take of concluding a balance is materially misstated when it is fairly stated.
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 is greater than tolerable misstatement.
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.

Accepted Answer

The Answer of Statistical inferences and Acceptable risk of incorrect is...

Question 20

Calculating the sample size using monetary unit sampling depends on which of the following factors?

Accepted Answer

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

Exam 17: Audit Sampling for Tests of Details of Balances

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

Stratified sampling is applicable to difference, mean-per-unit, and ratio estimation, but it is most commonly used with:

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

Acceptable risk of incorrect acceptance is directly affected by acceptable audit risk.

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?

Discuss the advantages and disadvantages of monetary-unit sampling over other sampling methods.

Tolerable misstatement is used to:

For stratified sampling, the auditor selects samples independently from each stratum.

As the amount of misstatements expected in the population approaches tolerable misstatement, the planned sample size will:

The use of monetary unit sampling is most appropriate when the auditor expects to find many errors and when a monetary result is desired.

When auditors apply MUS to a sample, the sample is selected using random sampling techniques.

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

MUS has the statistical simplicity of attributes sampling, yet provides a statistical result expressed as a percentage.

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 is concerned with the audited value rather than the error amount of each item in the sample when using:

Explain the decision rule used in monetary unit sampling to determine whether the population is acceptable.

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 not materially misstated.It was, in fact, materially misstated.This situation illustrates the risk of:

Calculating the sample size using monetary unit sampling depends on which of the following factors?

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

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Strategy and Audit Program

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

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, Substantive Tests of Transactions, and Accounts Payable

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

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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