Exam 19: Variables Sampling

Law,CPA is using nonstatistical sampling in his examination of Jye Company's accounts receivable.The recorded balance of Jye's accounts receivable was $750,000.Law selected a sample of customer accounts for examination,which were recorded at $50,000.Based on the responses received from accounts receivable confirmations,Law determined an audited value of $45,000 for the accounts receivable. If tolerable misstatement is $60,000,which of the following statements is not true?

When conducting variables sampling,auditors typically examine

How does monetary unit sampling (MUS)ensure that larger dollar components are selected for examination?

An auditor discovers that an account balance believed not to be materially misstated based on an audit sample was materially misstated based on the total population of the account balance.This is an example of which of the following types of sampling risks?

Which of the following statements is true regarding classical variables sampling?

Jones,CPA,used a classical variables sampling application to examine the inventory balance of XYZ Company.The recorded value of the inventory was $240,000,and Jones determined a tolerable misstatement of $12,000.Jones' sampling procedures resulted in a precision interval of $224,000 to $236,000.As a result,Jones should conclude that the

Which of the following is considered in determining the sample size in a classical variables sampling application but not in a monetary unit sampling application?

A client's inventory is recorded at $300,000 and is comprised of 1,000 items.If auditors examined a sample of 200 items and found a total misstatement of $20,000 (overstatement),what is the estimated audited balance for inventory?

Which of the following represents a major difference in the use of monetary unit sampling (MUS)and classical variables sampling?

Which of the following does not represent a difference between the use of various approaches to classical variables sampling?

In which of the following situations would the auditor be more likely to use monetary unit sampling as opposed to classical variables sampling?

In a classical variables sampling application,which of the following outcomes would typically not result from stratifying a population?

Below are some situations in which it would be preferable to use either monetary unit sampling or classical variables sampling.Using the letters M (for monetary unit sampling)or C (for classical variables sampling). ___ 1.Several sampling units in the population have a zero or negative balance. ___ 2.The auditor would like to examine a smaller number of items. ___ 3.The account balance is susceptible to understatement error. ___ 4.The account balance includes a few logical units with very large dollar balances. ___ 5.The auditor is able to form a reasonable estimate of the variability of the population. ___ 6.The auditor would like to ensure that the sampling method provides a conservative (higher)estimate of misstatement in the account balance. ___ 7.The account balance is susceptible to overstatement error.

How does the auditor establish the level of tolerable misstatement in a variables sampling application?

Which of the following is not considered in establishing the sample size in a monetary unit sampling application?

Auditors are evaluating an account with a recorded balance of $500,000 using mean-per-unit estimation.This account is comprised of 1,000 individual components.The auditors sampled 100 items and determined a total audited value of $52,500.Using a risk of incorrect acceptance of 10%,the auditors determined a precision of $40,000.If the tolerable misstatement is $50,000,which of the following is not true?

Samantha,CPA decided to stratify the population in her statistical sampling plan.Which of the following is the most likely reason she used this approach?

Which of the following is true with respect to the risk of incorrect acceptance?

The auditor's sample would indicate that the client's account balance is fairly stated when the _____ is less than the _____.

Which of the following statements is not true regarding variables sampling?