Exam 19: Variables Sampling

If an audit team performing a monetary unit sampling application selects a sample using a systematic random selection method,which of the following is true with respect to accounts with a balance greater than the sampling interval?

_____ sampling methods use normal distribution theory and the central limit theorem to provide a range estimate of the account balance or class of transactions or the misstatement in the account balance or class of transactions.

Green,CPA,performed a mean-per-unit sampling plan to examine the inventory balances of ABC Company.Green audited 120 items from a sample and found an audited value of $24,600.The sample had a recorded value of $30,000.If the entire inventory contained 2,400 items and the total recorded value of the inventory was $480,000,the estimated account balance using mean per unit estimation is

Which of the following would not be estimated using variables sampling?

Summitt,CPA,performed a nonstatistical sampling plan to examine the inventory balances of Hero Inc.,Which of the following methods of sample selection are available to her?

The risk of incorrect acceptance relates to the

Indicate how each of the following considerations would impact sample size in a classical variables sampling application by using I (increase),D (decrease),or N (no effect). ____ 1.The inventory account balance several unusually large items.Carson had decided to stratify the inventory account balance so that the unusually large items are selected. ____ 2.Carson assigned a higher level of the risk of incorrect rejection initially because he can quickly and inexpensively select additional items for examination if needed. ____ 3.Carson increased the expected misstatement due to the change in Furniture Expert's method of processing and recording transactions. ____ 4.Carson conducted a small pilot sample to assess the population's standard deviation.The results indicated that the population was highly variable. ____ 5.The risk of incorrect acceptance has been decreased because the results of Carson's attributes sampling related to inventory transactions indicated control risk should be increased. ____ 6.During the audit,Carson realized his initial determination of the population size only included the first 11 months of year.When he corrected the population to include all 12 months the recorded inventory account balance increased by $100,000 and 55 items.

Which of the following is not true with respect to the use of monetary unit sampling (MUS)?

Which component of the expanded audit risk model is most closely associated with the risk of incorrect acceptance?

Which of the following statements is true regarding performance materiality in a monetary unit sampling application?

Under monetary unit sampling,the sampling interval is determined by dividing the _____ by the _____.

Incorrect rejection occurs when the auditor concludes that the account balance is _____ when in fact it is _____.

In a variables sampling application,which of the following would not ordinarily be documented by the audit team?

How does the auditor typically determine the appropriate level of the risk of incorrect rejection when using classical variables sampling?

Which of the following components of the upper limit on misstatements will exist in all monetary unit sampling applications,even in those where no misstatements are found?

MES is auditing a client's accounts receivable balance recorded at $2 million using MUS sampling.The following parameters have been established for this account: • Tolerable misstatement = $200,000 • Expected misstatement = $100,000 • Risk of incorrect acceptance = 5% Which of the following statements would not be true with respect to the sample size in this situation?

The process of subdividing a population into more homogeneous subgroups is known as

As the auditors' assessments of control risk and analytical procedures risk decrease,which of the following statements is true?

What is one of the primary benefits of stratifying a population?

Romo,CPA performed nonstatistical sampling to examine the inventory balances of Jones Company.The sample included 125 of the total 1,250 items with a recorded value of $550,000.Romo determined the expected misstatement to be $25,000 and the tolerable misstatement to be $40,000.The sample had a recorded value of $54,000 and an audited value of $52,000.What conclusion did Romo draw regarding the account balance?