Exam 19: Variables Sampling

E.Ewing,CPA,performed a nonstatistical sampling plan to examine the inventory balances of Management,Inc.Which of the following methods of sample selection are available to use?

The auditor would decide to accept the account balance as fairly stated when the upper limit on misstatement is less than or equal to the _____________________________.

The maximum amount by which the account balance or class of transactions can be misstated without influencing the decisions of third-party users is the

You are planning to use monetary unit sampling (MUS)to evaluate accounts receivable for Rose Company.The accounts receivable account totals $4,000,000.You have assessed a risk of incorrect acceptance of 10 percent,a tolerable misstatement of $200,000,and an expected error of $40,000. a.Calculate the sample size and sampling interval. b.Regardless of your answer to (a),use a sample size of 66 and the related sampling interval to calculate the upper limit on misstatement assuming you found the following differences.

The ____________________________________ is the maximum amount by which the account balance or class of transactions can be misstated without influencing the decisions of third-party users.

Which of the following components of the upper limit on misstatement is determined by multiplying the sampling interval by the reliability factor for the acceptable risk of incorrect acceptance?

The level of tolerable misstatement assessed by the auditor is based on the recorded balance of the account balance or class of transactions as well as the relationship of the account balance to important financial statement subtotals.

N.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

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

All other factors being equal,as the risk of incorrect acceptance and tolerable misstatement increase,the sample size will

The basic allowance for sampling risk should only be calculated if the auditor identifies a misstatement.

Which of the following courses of action would an auditor who is aware of several unusually large cash disbursements most likely follow in planning a sample of cash disbursements?

Which of the following types of variables sampling plans has a tendency to select higher dollar items for examination?

D.Rome,CPA is conducting a classical variables sampling application on a client's accounts receivable recorded at $3,000,000.These receivables are composed of 5,000 customer accounts.Assume that Rome identified an acceptable level of the risk of incorrect acceptance of 5 percent,determined a sample size of 100,and confirmed the accounts with the client's customers.Rome's substantive procedures indicated that the average audited value was $590 per account. a.Determine the sample estimate of the client's accounts receivable. b.If the standard deviation of sample estimates is $30,calculate the precision. c.Calculate the precision interval.

The projected misstatement is determined by multiplying the sampling interval by the

The sampling method used to examine a population when the auditor wants to estimate a continuous amount (or value)of the population is

The following are descriptions of components of the upper limit on misstatement.Using the correct letter,indicate which component is most closely associated with the description.Each component is associated with only one description.

Which of the following statements is correct about monetary unit sampling?

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

Which of the following is not true with respect to the risk of incorrect rejection?