Question 1

An auditor is most likely to use statistical sampling under which of the following situations?

Accepted Answer

A)  Random numbers can be associated with population items. 
B)  Strictly defensible results based on mathematics are not necessary. 
C)  The auditor has a very good knowledge of the population. 
D)  The population is very diverse with some segments especially prone to misstatement. 
A)  Random numbers can be associated with population items. 
B)  Strictly defensible results based on mathematics are not necessary. 
C)  The auditor has a very good knowledge of the population. 
D)  The population is very diverse with some segments especially prone to misstatement.

Question 2

In performing variables sampling,the auditor will conclude that the account balance is not materially misstated if the _______________ is less than or equal to ______________.

Accepted Answer

A)  upper limit on misstatement, tolerable misstatement. 
B)  expected error, tolerable misstatement. 
C)  tolerable misstatement, upper limit on misstatement. 
D)  tolerable misstatement, expected error. 
A)  upper limit on misstatement, tolerable misstatement. 
B)  expected error, tolerable misstatement. 
C)  tolerable misstatement, upper limit on misstatement. 
D)  tolerable misstatement, expected error.

Question 3

Sampling typically involves examining less than 100 percent of the items composing a population of interest.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements best describes nonstatistical sampling?

Accepted Answer

A)  Nonstatistical sampling does not allow the auditor to measure the exposure to sampling risk. 
B)  Nonstatistical sampling selects only very large dollar items for examination. 
C)  Nonstatistical sampling should be used only in situations in which the auditor anticipates issuing a qualified or adverse opinion on the client's financial statements. 
D)  Nonstatistical sampling should be used when the auditor selects a substantive audit approach. 
A)  Nonstatistical sampling does not allow the auditor to measure the exposure to sampling risk. 
B)  Nonstatistical sampling selects only very large dollar items for examination. 
C)  Nonstatistical sampling should be used only in situations in which the auditor anticipates issuing a qualified or adverse opinion on the client's financial statements. 
D)  Nonstatistical sampling should be used when the auditor selects a substantive audit approach.

Question 5

In a sampling application to determine the average weight of students enrolled in a fitness class,if the sample estimate is 120 pounds,the precision is 10 pounds,and the reliability is 90 percent,which of the following statements is true?

Accepted Answer

A)  There is 10 percent likelihood that the average weight of a student in the class is more than 130 pounds. 
B)  There is 10 percent likelihood that the average weight of a student in the class is less than 110 pounds. 
C)  There is 90 percent likelihood that the average weight of a student in the class is less than 110 pounds or more than 130 pounds. 
D)  There is a 90 percent likelihood that the average weight of a student in the class is between 110 and 130 pounds. 
A)  There is 10 percent likelihood that the average weight of a student in the class is more than 130 pounds. 
B)  There is 10 percent likelihood that the average weight of a student in the class is less than 110 pounds. 
C)  There is 90 percent likelihood that the average weight of a student in the class is less than 110 pounds or more than 130 pounds. 
D)  There is a 90 percent likelihood that the average weight of a student in the class is between 110 and 130 pounds.

Question 6

The risks of incorrect acceptance in variables sampling and of assessing control risk too low in attributes sampling both relate to

Accepted Answer

A)  Effectiveness of an audit. 
B)  Efficiency of an audit. 
C)  Control risk assessment decisions. 
D)  Evidence about assertions in financial statements. 
A)  Effectiveness of an audit. 
B)  Efficiency of an audit. 
C)  Control risk assessment decisions. 
D)  Evidence about assertions in financial statements.

Question 7

A limitation of systematic random selection is that this method

Accepted Answer

A)  Has a relatively low likelihood of yielding a representative sample. 
B)  Results in a larger sample size than other selection methods. 
C)  Can result in bypassing a number of items having similar characteristics. 
D)  Cannot be used with statistical sampling plans. 
A)  Has a relatively low likelihood of yielding a representative sample. 
B)  Results in a larger sample size than other selection methods. 
C)  Can result in bypassing a number of items having similar characteristics. 
D)  Cannot be used with statistical sampling plans.

Question 8

_________________ risk is the risk that the decision made based on the sample differs from the decision that would have been made if the entire population had been examined.

Accepted Answer

The answer of _________________ risk is the risk that the...

Question 9

If the upper limit rate of deviation exceeds the tolerable rate of deviation,the auditor would most likely

Accepted Answer

A)  Accept the account balance as fairly stated. 
B)  Reject the account balance as fairly stated. 
C)  Increase the planned effectiveness of substantive procedures. 
D)  Not increase the planned effectiveness of substantive procedures. 
A)  Accept the account balance as fairly stated. 
B)  Reject the account balance as fairly stated. 
C)  Increase the planned effectiveness of substantive procedures. 
D)  Not increase the planned effectiveness of substantive procedures.

Question 10

Which of the following pairs of selection methods could appropriately be used in statistical sampling applications?

Accepted Answer

A)  Unrestricted random selection, block selection. 
B)  Block selection, haphazard selection. 
C)  Systematic random selection, haphazard selection. 
D)  Unrestricted random selection, systematic random selection. 
A)  Unrestricted random selection, block selection. 
B)  Block selection, haphazard selection. 
C)  Systematic random selection, haphazard selection. 
D)  Unrestricted random selection, systematic random selection.

Question 11

Which of the following is not an advantage of statistical sampling?

Accepted Answer

A)  It requires a precise and definite approach to the audit problem. 
B)  It incorporates evaluation that calculates a direct relation between the sample results and the entire population under audit. 
C)  It requires auditors to specify particular judgments on risk and overall materiality. 
D)  It permits the auditor to reapply evaluation judgments based on factors in addition to the sample evidence. 
A)  It requires a precise and definite approach to the audit problem. 
B)  It incorporates evaluation that calculates a direct relation between the sample results and the entire population under audit. 
C)  It requires auditors to specify particular judgments on risk and overall materiality. 
D)  It permits the auditor to reapply evaluation judgments based on factors in addition to the sample evidence.

Question 12

The risk that may result in the auditor's issuing an unqualified opinion on financial statements that are materially misstated is the

Accepted Answer

A)  Risk of assessing control risk too low. 
B)  Risk of assessing control risk too high. 
C)  Risk of incorrect acceptance. 
D)  Risk of incorrect rejection. 
A)  Risk of assessing control risk too low. 
B)  Risk of assessing control risk too high. 
C)  Risk of incorrect acceptance. 
D)  Risk of incorrect rejection.

Question 13

Which of the following would not result in exposure to nonsampling risk?

Accepted Answer

A)  Measuring the characteristic of interest in an inappropriate manner. 
B)  Selecting items that are not representative of the population of interest. 
C)  Making an unintentional mistake in measuring the characteristic of interest. 
D)  All of the above would result in exposure to nonsampling risk. 
A)  Measuring the characteristic of interest in an inappropriate manner. 
B)  Selecting items that are not representative of the population of interest. 
C)  Making an unintentional mistake in measuring the characteristic of interest. 
D)  All of the above would result in exposure to nonsampling risk.

Question 14

Which of the following is an example of sampling risk if an individual is attempting to determine whether the average income in a given neighborhood exceeds $100,000?

Accepted Answer

A)  The sample results indicate that the average income is $98,000 when it is $90,000. 
B)  The sample results indicate that the average income is $99,000 when it is $110,000. 
C)  The sample results indicate that the average income is $110,000 when it is $115,000. 
D)  All of the above are examples of sampling risk. 
A)  The sample results indicate that the average income is $98,000 when it is $90,000. 
B)  The sample results indicate that the average income is $99,000 when it is $110,000. 
C)  The sample results indicate that the average income is $110,000 when it is $115,000. 
D)  All of the above are examples of sampling risk.

Question 15

The precision represents the closeness of an item to the true (unknown)population value.

Accepted Answer

A) True 
 B)False

Question 16

If a golf professional is interested in determining whether a golf ball can be hit over 300 yards,which of the following relationships between the adjusted sample estimate of distance and the actual distance would represent sampling risk?

Accepted Answer

A)  Adjusted estimate = 295 yards; actual = 298 yards. 
B)  Adjusted estimate = 305 yards; actual = 301 yards. 
C)  Adjusted estimate = 310 yards; actual = 295 yards. 
D)  All of the above are examples of sampling risk. 
A)  Adjusted estimate = 295 yards; actual = 298 yards. 
B)  Adjusted estimate = 305 yards; actual = 301 yards. 
C)  Adjusted estimate = 310 yards; actual = 295 yards. 
D)  All of the above are examples of sampling risk.

Question 17

A disadvantage of using a systematic random selection procedure is that

Accepted Answer

A)  This type of procedure does not permit the auditor to measure the exposure to sampling risk. 
B)  This type of procedure does not make all items available for selection. 
C)  This type of procedure requires that the population be arranged in a random order. 
D)  This type of procedure provides the auditor a higher level of exposure to nonsampling risk compared to other selection procedures. 
A)  This type of procedure does not permit the auditor to measure the exposure to sampling risk. 
B)  This type of procedure does not make all items available for selection. 
C)  This type of procedure requires that the population be arranged in a random order. 
D)  This type of procedure provides the auditor a higher level of exposure to nonsampling risk compared to other selection procedures.

Question 18

Select the description that best illustrates sampling risk.

Accepted Answer

A)  Applying audit procedures that are inappropriate for the audit objectives. 
B)  Failing to recognize misstatements or deviations in the documents examined. 
C)  Arriving at incorrect statistical conclusions due to computational errors. 
D)  Choosing a sample that has proportionately more errors than the population. 
A)  Applying audit procedures that are inappropriate for the audit objectives. 
B)  Failing to recognize misstatements or deviations in the documents examined. 
C)  Arriving at incorrect statistical conclusions due to computational errors. 
D)  Choosing a sample that has proportionately more errors than the population.

Question 19

Which of the following selection methods is characterized by identifying a series of random numbers and "matching" those numbers to items within the population?

Accepted Answer

A)  Block selection. 
B)  Haphazard selection. 
C)  Systematic selection. 
D)  Unrestricted random selection. 
A)  Block selection. 
B)  Haphazard selection. 
C)  Systematic selection. 
D)  Unrestricted random selection.

Question 20

When using sampling in the study of internal control,the audit team audit team would compare a conservative estimate of the rate of deviation to the

Accepted Answer

A)  Expected rate of deviation. 
B)  Sample rate of deviation. 
C)  Statistical rate of deviation. 
D)  Tolerable rate of deviation. 
A)  Expected rate of deviation. 
B)  Sample rate of deviation. 
C)  Statistical rate of deviation. 
D)  Tolerable rate of deviation.

An auditor is most likely to use statistical sampling under which of the following situations?

In performing variables sampling,the auditor will conclude that the account balance is not materially misstated if the _ is less than or equal to .

Sampling typically involves examining less than 100 percent of the items composing a population of interest.

Which of the following statements best describes nonstatistical sampling?

In a sampling application to determine the average weight of students enrolled in a fitness class,if the sample estimate is 120 pounds,the precision is 10 pounds,and the reliability is 90 percent,which of the following statements is true?

The risks of incorrect acceptance in variables sampling and of assessing control risk too low in attributes sampling both relate to

A limitation of systematic random selection is that this method

_________________ risk is the risk that the decision made based on the sample differs from the decision that would have been made if the entire population had been examined.

If the upper limit rate of deviation exceeds the tolerable rate of deviation,the auditor would most likely

Which of the following pairs of selection methods could appropriately be used in statistical sampling applications?

Which of the following is not an advantage of statistical sampling?

The risk that may result in the auditor's issuing an unqualified opinion on financial statements that are materially misstated is the

Which of the following would not result in exposure to nonsampling risk?

Which of the following is an example of sampling risk if an individual is attempting to determine whether the average income in a given neighborhood exceeds $100,000?

The precision represents the closeness of an item to the true (unknown)population value.

If a golf professional is interested in determining whether a golf ball can be hit over 300 yards,which of the following relationships between the adjusted sample estimate of distance and the actual distance would represent sampling risk?

A disadvantage of using a systematic random selection procedure is that

Select the description that best illustrates sampling risk.

Which of the following selection methods is characterized by identifying a series of random numbers and "matching" those numbers to items within the population?

When using sampling in the study of internal control,the audit team audit team would compare a conservative estimate of the rate of deviation to the

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Exam 17: Overview of Sampling

An auditor is most likely to use statistical sampling under which of the following situations?

In performing variables sampling,the auditor will conclude that the account balance is not materially misstated if the _______________ is less than or equal to ______________.

Sampling typically involves examining less than 100 percent of the items composing a population of interest.

Which of the following statements best describes nonstatistical sampling?

In a sampling application to determine the average weight of students enrolled in a fitness class,if the sample estimate is 120 pounds,the precision is 10 pounds,and the reliability is 90 percent,which of the following statements is true?

The risks of incorrect acceptance in variables sampling and of assessing control risk too low in attributes sampling both relate to

A limitation of systematic random selection is that this method

_________________ risk is the risk that the decision made based on the sample differs from the decision that would have been made if the entire population had been examined.

If the upper limit rate of deviation exceeds the tolerable rate of deviation,the auditor would most likely

Which of the following pairs of selection methods could appropriately be used in statistical sampling applications?

Which of the following is not an advantage of statistical sampling?

The risk that may result in the auditor's issuing an unqualified opinion on financial statements that are materially misstated is the

Which of the following would not result in exposure to nonsampling risk?

Which of the following is an example of sampling risk if an individual is attempting to determine whether the average income in a given neighborhood exceeds $100,000?

The precision represents the closeness of an item to the true (unknown)population value.

If a golf professional is interested in determining whether a golf ball can be hit over 300 yards,which of the following relationships between the adjusted sample estimate of distance and the actual distance would represent sampling risk?

A disadvantage of using a systematic random selection procedure is that

Select the description that best illustrates sampling risk.

Which of the following selection methods is characterized by identifying a series of random numbers and "matching" those numbers to items within the population?

When using sampling in the study of internal control,the audit team audit team would compare a conservative estimate of the rate of deviation to the

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

In performing variables sampling,the auditor will conclude that the account balance is not materially misstated if the _ is less than or equal to .