Exam 19: Variables Sampling

Below are descriptions of components of the upper limit on misstatements.Indicate,using the correct letter,which component is most closely associated with the description.Each component is associated with only one description. A.Actual misstatement.B.Projected misstatement. C.Incremental allowance for sampling risk. D.Basic allowance for sampling risk. 1___.Provides an estimate of the amount of misstatement that may exist in sampling intervals in which no misstatements were observed. 2___.Determined by multiplying the sampling interval by the tainting percentage. 3___.Determined by taking the difference between the recorded balance and the audited value. 4___.Determined by multiplying the projected misstatement by the incremental change in the confidence factor minus one.

Which of the following set of conditions would provide the auditor with the smallest sample size under monetary unit sampling (RIA = risk of incorrect acceptance,EM = expected misstatement,TM = tolerable misstatement,PS = population size)?

Which of the following components of the upper limit on misstatements is affected by misstatements detected during the audit examination? Basic Allowance for Incremertal Allowano Sampling Risk for Sampling Fisk A. Yes No B. No No C. No Yes D. Yes Yes

Which of the following factors has a direct relationship with sample size in a variables sampling application?

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

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

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

Which of the following is found by dividing the amount of misstatement noted in a logical unit by the recorded amount of that logical unit?

If a customer's account was recorded at $45,000,the audited value was $30,000,and the sampling interval was $30,000,the projected misstatement would be:

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

Auditors are evaluating an account with a recorded balance of $700,000 using classical variables sampling.Based on an allowable risk of incorrect acceptance of 10 percent,the auditors have determined the following: -Estimated account balance = $640,000 -Precision = $20,000 -Tolerable misstatement = $50,000 Which of the following best describes the auditors' decision and rationale for that decision?

What is the auditor's normal course of action if a "logical unit" is selected twice in monetary unit sampling?

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?

What is the appropriate sampling interval?

SCA is auditing a client's accounts receivable balance recorded at $10 million using MUS.The following parameters have been established for this account: -Tolerable misstatement = $500,000 -Expected misstatement = $100,000 -Risk of incorrect acceptance = 10 percent Which of the following statements would not be true with respect to the sample size in this situation?

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

Rome,CPA is conducting a classical variables sampling application on a client's accounts receivable recorded at $3,000,000.These receivables are comprised 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.

In which of the following circumstances would the auditor most likely use variables sampling?

Which of the following would not result in a lower level of the risk of incorrect acceptance?

Which of the following selection methods selects individual dollars within an account balance or class of transactions for examination?