Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

When the sample selection is done using probability proportional to size sample selection (PPS),

Accepted Answer

A)  the actual number of units selected for testing may be more than the computed sample size. 
B)  the auditor must use systematic selection, rather than random selection of dollars. 
C)  population items with a zero recorded balance have no chance of being selected. 
D)  negative balances must be treated as positive balances. 
A)  the actual number of units selected for testing may be more than the computed sample size. 
B)  the auditor must use systematic selection, rather than random selection of dollars. 
C)  population items with a zero recorded balance have no chance of being selected. 
D)  negative balances must be treated as positive balances.

Question 3

The method used to measure the estimated total misstatement 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 4

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)

Question 5

If an auditor desires a greater level of assurance in auditing a balance, the acceptable risk of incorrect acceptance

Accepted Answer

A)  is reduced. 
B)  is increased. 
C)  is not changed. 
D)  may be reduced or increased depending upon other circumstances. 
A)  is reduced. 
B)  is increased. 
C)  is not changed. 
D)  may be reduced or increased depending upon other circumstances.

Question 6

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 7

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 8

To address sampling risk, auditors can use either nonstatistical or statistical methods for tests of controls, substantive tests of transactions, and test of details of balances.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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

Question 11

To determine the sampling interval, the population is divided by the confidence factor.

Accepted Answer

A) True 
 B)False

Question 12

The final step in the evaluation of the audit results is the decision to

Accepted Answer

A)  accept the population as fairly stated or to require further action. 
B)  determine sampling error and calculate the estimated total population error. 
C)  project the point estimate. 
D)  determine the error in each sample. 
A)  accept the population as fairly stated or to require further action. 
B)  determine sampling error and calculate the estimated total population error. 
C)  project the point estimate. 
D)  determine the error in each sample.

Question 13

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 14

An accounts receivable population contains a total of four customers. The accounts, the amounts, and the cumulative total are shown below. Monetary unit sampling is to be used.   Based on the information above, the population size is

Accepted Answer

A)  4. 
B)  574. 
C)  1,272. 
D)  2,684. 
A)  4. 
B)  574. 
C)  1,272. 
D)  2,684.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 17

The auditor's principal objective when using a sample of tests of details of balances is whether the

Accepted Answer

A)  account balance being audited is fairly stated. 
B)  transactions being audited are free of misstatements. 
C)  controls being tested are operating effectively. 
D)  transactions and account balances being audited are fairly stated. 
A)  account balance being audited is fairly stated. 
B)  transactions being audited are free of misstatements. 
C)  controls being tested are operating effectively. 
D)  transactions and account balances being audited are fairly stated.

Question 18

In monetary unit sampling, the relationship between tolerable misstatement size and required sample size is

Accepted Answer

A)  direct. 
B)  inverse. 
C)  varied. 
D)  indeterminable. 
A)  direct. 
B)  inverse. 
C)  varied. 
D)  indeterminable.

Question 19

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 20

The acceptable 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

Exam 17: Audit Sampling for Tests of Details of Balances

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

When the sample selection is done using probability proportional to size sample selection (PPS),

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

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

If an auditor desires a greater level of assurance in auditing a balance, the acceptable risk of incorrect acceptance

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

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

To address sampling risk, auditors can use either nonstatistical or statistical methods for tests of controls, substantive tests of transactions, and test of details of balances.

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

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

To determine the sampling interval, the population is divided by the confidence factor.

The final step in the evaluation of the audit results is the decision to

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

An accounts receivable population contains a total of four customers. The accounts, the amounts, and the cumulative total are shown below. Monetary unit sampling is to be used. Based on the information above, the population size is

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

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

The auditor's principal objective when using a sample of tests of details of balances is whether the

In monetary unit sampling, the relationship between tolerable misstatement size and required sample size is

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

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

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 Materiality

Assessing the Risk of Material Misstatement

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, 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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