Question 1

Match the following.
-MUS Upper misstatement limit

Accepted Answer

A) an individual dollar 
B) the total of the projected misstatement plus the allowance for sampling risk 
C) the difference between monetary amounts in the entity's records and amounts supported by audit evidence 
D) the account or transaction that contains the selected dollar 
A) an individual dollar 
B) the total of the projected misstatement plus the allowance for sampling risk 
C) the difference between monetary amounts in the entity's records and amounts supported by audit evidence 
D) the account or transaction that contains the selected dollar

Question 2

If the upper limit on misstatements exceeds tolerable misstatement, the auditor is least likely to:

Accepted Answer

A) increase sample size. 
B) conduct other substantive procedures. 
C) adjust the account balance. 
D) increase the risk of incorrect rejection. 
A) increase sample size. 
B) conduct other substantive procedures. 
C) adjust the account balance. 
D) increase the risk of incorrect rejection.

Question 3

You have been placed in charge of determining the sample size for an audit of accounts receivable. Your superior would like a confidence level of 99%. How does this affect your determination of sample size? What can you infer about the level of risk of incorrect acceptance that your superior is willing to accept?

Accepted Answer

A lot of work will be required to achiev

Question 4

What is the primary objective of testing all individually significant items rather than sample testing?

Accepted Answer

A) To increase the audit risk at which a decision will be reached from the results of the sample selected. 
B) To increase sample size. 
C) To accept no sampling risk for items greater than tolerable misstatement. 
D) To increase the size of the confidence bound around the projected misstatement. 
A) To increase the audit risk at which a decision will be reached from the results of the sample selected. 
B) To increase sample size. 
C) To accept no sampling risk for items greater than tolerable misstatement. 
D) To increase the size of the confidence bound around the projected misstatement.

Question 5

Which of the following sample planning factors would influence the sample size for a substantive test of details for a specific account?

Accepted Answer

A) Expected amount of misstatement but not the measure of tolerable misstatement. 
B) Expected amount of misstatement and the measure of tolerable misstatement. 
C) Measure of tolerable misstatement but not the expected amount of misstatement. 
D) Neither the expected amount of misstatement nor the measure of tolerable misstatement. 
A) Expected amount of misstatement but not the measure of tolerable misstatement. 
B) Expected amount of misstatement and the measure of tolerable misstatement. 
C) Measure of tolerable misstatement but not the expected amount of misstatement. 
D) Neither the expected amount of misstatement nor the measure of tolerable misstatement.

Question 6

The formula for nonstatistical sampling sample sizes provided by the AICPA:

Accepted Answer

A) must be used for nonstatistical sampling. 
B) includes a provision for the risk of incorrect acceptance. 
C) includes a measure for the expected misstatement in the population. 
D) is largely based on the variation of items in the account. 
A) must be used for nonstatistical sampling. 
B) includes a provision for the risk of incorrect acceptance. 
C) includes a measure for the expected misstatement in the population. 
D) is largely based on the variation of items in the account.

Question 7

Monetary-unit sampling should not be used if:

Accepted Answer

A) the population includes several large items. 
B) the auditor expects overstatement errors. 
C) many items in the account are expected to have errors. 
D) no items in the account are expected to have errors. 
A) the population includes several large items. 
B) the auditor expects overstatement errors. 
C) many items in the account are expected to have errors. 
D) no items in the account are expected to have errors.

Question 8

Whenever a statistical method is used, a decision rule determines whether the population is acceptable. The decision rule for monetary-unit sampling is "Accept the conclusion that the book value is not misstated by a material amount if ________."

Accepted Answer

the upper misstateme

Question 9

Which of the following most likely would be an advantage in using classical variables sampling rather than monetary-unit sampling?

Accepted Answer

A) An estimate of the standard deviation of the population's recorded amounts is not required. 
B) The auditor rarely needs the assistance of a computer program to design an efficient sample. 
C) Inclusion of zero and negative balances generally does not require special design considerations. 
D) Any amount that is individually significant is automatically identified and selected. 
A) An estimate of the standard deviation of the population's recorded amounts is not required. 
B) The auditor rarely needs the assistance of a computer program to design an efficient sample. 
C) Inclusion of zero and negative balances generally does not require special design considerations. 
D) Any amount that is individually significant is automatically identified and selected.

Question 10

Confidence level is inversely related to sample size.

Accepted Answer

A) True 
 B)False

Question 11

In a monetary-unit sampling plan, the upper misstatement limit is $11,200 and the risk of incorrect acceptance is 5%. This means that:

Accepted Answer

A) tolerable misstatement is $11,200. 
B) there is a 95% chance that the actual misstatement in the account is $11,200 or more. 
C) there is a 95% chance that the actual misstatement in the account is $11,200. 
D) there is a 95% chance that the actual misstatement in the account is $11,200 or less. 
A) tolerable misstatement is $11,200. 
B) there is a 95% chance that the actual misstatement in the account is $11,200 or more. 
C) there is a 95% chance that the actual misstatement in the account is $11,200. 
D) there is a 95% chance that the actual misstatement in the account is $11,200 or less.

Question 12

The risk of incorrect acceptance and the risk of overreliance (Type II Errors)relate to the:

Accepted Answer

A) preliminary estimates of materiality levels. 
B) allowable risk of tolerable error. 
C) efficiency of the audit. 
D) effectiveness of the audit. 
A) preliminary estimates of materiality levels. 
B) allowable risk of tolerable error. 
C) efficiency of the audit. 
D) effectiveness of the audit.

Question 13

Which of the following would be an improper technique when using monetary-unit statistical sampling in an audit of accounts receivable?

Accepted Answer

A) Combining negative and positive dollar misstatements in the appraisal of a sample. 
B) Using a sampling technique in which the same account balance could be selected more than once. 
C) Selecting a random starting point and then sampling every nᵗʰ dollar. 
D) Defining the sampling unit in the population as an individual dollar and not as an individual account balance. 
A) Combining negative and positive dollar misstatements in the appraisal of a sample. 
B) Using a sampling technique in which the same account balance could be selected more than once. 
C) Selecting a random starting point and then sampling every nᵗʰ dollar. 
D) Defining the sampling unit in the population as an individual dollar and not as an individual account balance.

Question 14

Match the following.
-MUS logical unit

Accepted Answer

A) an individual dollar 
B) the total of the projected misstatement plus the allowance for sampling risk 
C) the difference between monetary amounts in the entity's records and amounts supported by audit evidence 
D) the account or transaction that contains the selected dollar 
A) an individual dollar 
B) the total of the projected misstatement plus the allowance for sampling risk 
C) the difference between monetary amounts in the entity's records and amounts supported by audit evidence 
D) the account or transaction that contains the selected dollar

Question 15

Which one of the following statements is true regarding two random samples, drawn in the same way, from the same population, one of size 30 and one of size 300?

Accepted Answer

A) The two samples are expected to have the same sample mean. 
B) The larger sample is more likely to produce a large sample mean. 
C) The smaller sample will have a smaller 95% confidence interval for the mean. 
D) The smaller sample will, on average, produce a lower estimate of the variance of the population. 
A) The two samples are expected to have the same sample mean. 
B) The larger sample is more likely to produce a large sample mean. 
C) The smaller sample will have a smaller 95% confidence interval for the mean. 
D) The smaller sample will, on average, produce a lower estimate of the variance of the population.

Question 16

Which of the following sampling methods would be used to estimate a numerical measurement of population, such as the dollar value of an account?

Accepted Answer

A) Attributes sampling. 
B) Stop-or-go sampling. 
C) Classical variables sampling. 
D) Random-number sampling. 
A) Attributes sampling. 
B) Stop-or-go sampling. 
C) Classical variables sampling. 
D) Random-number sampling.

Question 17

For monetary-unit sampling, a sampling interval of 400 means that:

Accepted Answer

A) every 400ᵗʰ item in the account will be selected in the sample. 
B) the average size of items in the account is 400. 
C) every 400ᵗʰ dollar in the account will be included in the sample. 
D) the average misstatement in sample items is $400. 
A) every 400ᵗʰ item in the account will be selected in the sample. 
B) the average size of items in the account is 400. 
C) every 400ᵗʰ dollar in the account will be included in the sample. 
D) the average misstatement in sample items is $400.

Question 18

The use of the ratio projection is most effective when:

Accepted Answer

A) the dollar amount of the misstatement is expected to relate to the dollar amount of items tested. 
B) a small number of differences exist in the population. 
C) estimating populations whose records consist of quantities but not book values. 
D) large understatement differences exist in the population. 
A) the dollar amount of the misstatement is expected to relate to the dollar amount of items tested. 
B) a small number of differences exist in the population. 
C) estimating populations whose records consist of quantities but not book values. 
D) large understatement differences exist in the population.

Question 19

When auditing accounts payable using classical variables sampling, Sue finds evidence indicating that the account may be materially misstated. What are Sue's options?

Accepted Answer

Sue can (1)increase the sample size, (2)

Question 20

After a sample is drawn randomly, the allowance for sampling risk must be statistically quantified within a specified level of confidence when using nonstatistical sampling techniques.

Accepted Answer

A) True 
 B)False

Match the following. -MUS Upper misstatement limit

If the upper limit on misstatements exceeds tolerable misstatement, the auditor is least likely to:

What is the primary objective of testing all individually significant items rather than sample testing?

Which of the following sample planning factors would influence the sample size for a substantive test of details for a specific account?

The formula for nonstatistical sampling sample sizes provided by the AICPA:

Monetary-unit sampling should not be used if:

Whenever a statistical method is used, a decision rule determines whether the population is acceptable. The decision rule for monetary-unit sampling is "Accept the conclusion that the book value is not misstated by a material amount if ________."

Which of the following most likely would be an advantage in using classical variables sampling rather than monetary-unit sampling?

Confidence level is inversely related to sample size.

In a monetary-unit sampling plan, the upper misstatement limit is $11,200 and the risk of incorrect acceptance is 5%. This means that:

The risk of incorrect acceptance and the risk of overreliance (Type II Errors)relate to the:

Which of the following would be an improper technique when using monetary-unit statistical sampling in an audit of accounts receivable?

Match the following. -MUS logical unit

Which one of the following statements is true regarding two random samples, drawn in the same way, from the same population, one of size 30 and one of size 300?

Which of the following sampling methods would be used to estimate a numerical measurement of population, such as the dollar value of an account?

For monetary-unit sampling, a sampling interval of 400 means that:

The use of the ratio projection is most effective when:

When auditing accounts payable using classical variables sampling, Sue finds evidence indicating that the account may be materially misstated. What are Sue's options?

After a sample is drawn randomly, the allowance for sampling risk must be statistically quantified within a specified level of confidence when using nonstatistical sampling techniques.

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders' Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

Assurance, Attestation, and Internal Auditing Services

Filters

Exam 9: Audit Sampling: An Application to Substantive Tests of Account Balances

Match the following. -MUS Upper misstatement limit

If the upper limit on misstatements exceeds tolerable misstatement, the auditor is least likely to:

What is the primary objective of testing all individually significant items rather than sample testing?

Which of the following sample planning factors would influence the sample size for a substantive test of details for a specific account?

The formula for nonstatistical sampling sample sizes provided by the AICPA:

Monetary-unit sampling should not be used if:

Whenever a statistical method is used, a decision rule determines whether the population is acceptable. The decision rule for monetary-unit sampling is "Accept the conclusion that the book value is not misstated by a material amount if ________."

Which of the following most likely would be an advantage in using classical variables sampling rather than monetary-unit sampling?

Confidence level is inversely related to sample size.

In a monetary-unit sampling plan, the upper misstatement limit is $11,200 and the risk of incorrect acceptance is 5%. This means that:

The risk of incorrect acceptance and the risk of overreliance (Type II Errors)relate to the:

Which of the following would be an improper technique when using monetary-unit statistical sampling in an audit of accounts receivable?

Match the following. -MUS logical unit

Which one of the following statements is true regarding two random samples, drawn in the same way, from the same population, one of size 30 and one of size 300?

Which of the following sampling methods would be used to estimate a numerical measurement of population, such as the dollar value of an account?

For monetary-unit sampling, a sampling interval of 400 means that:

The use of the ratio projection is most effective when:

When auditing accounts payable using classical variables sampling, Sue finds evidence indicating that the account may be materially misstated. What are Sue's options?

After a sample is drawn randomly, the allowance for sampling risk must be statistically quantified within a specified level of confidence when using nonstatistical sampling techniques.

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders' Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

Assurance, Attestation, and Internal Auditing Services

Filters