Exam 19: Variables Sampling

Pujols,CPA,performed a nonstatistical sampling plan to examine the inventory balances of Wieserbud Brewing,Inc.and estimated the account balance based on the ratio of audited value to recorded balances.He audited 120 items from a sample and found an audited value of $24,600.The sample had a recorded balance of $30,000.If the entire inventory contained 2,400 items and the total recorded balance of the inventory was $480,000,the estimated account balance using nonstatistical methods is:

You are planning to use monetary unit sampling to evaluate accounts receivable for Violet Company.The accounts receivable account totals $3,000,000.You have assessed a risk of incorrect acceptance of 5 percent,a tolerable misstatement of $120,000,and an expected misstatement of $24,000. a.Calculate the sample size and sampling interval. b.Regardless of your answer to (a),use a sample size of 125 and the related sampling interval and calculate the upper limit on misstatements assuming you found the following differences. Account Recorded Balance 102 2,000 235 3,200 Audited Value Difference \6 00 \1 ,400 1,920 1,280

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 balance of $30,000.If the entire inventory contained 2,400 items and the total recorded balance 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?

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

An auditor may decide to increase the risk of incorrect rejection when:

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

Jeter,CPA,performed a nonstatistical sampling plan to examine the inventory balances of Big Apple Company and estimated the account balance based on the ratio of audited value to recorded balances.He audited 200 items from a sample and found an audited value of $36,000.The sample had a recorded balance of $40,000.If the entire inventory contained 3,000 items and the total recorded balance of the inventory was $500,000,the estimated account balance using nonstatistical estimation and projecting the error based on number of items examined is:

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

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

As the expected misstatement is large relative to the tolerable misstatement,the audit team would most likely

Which of the following expresses the relationship between changes in the factors and changes in sample size in 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?

Holding other factors constant in a classical variables sampling application,an increase in which of these factors will cause sample size to increase?

Zimmerman is auditing a client's accounts balance recorded at $1 million using monetary unit sampling.After assessing the appropriate parameters,Zimmerman determined an appropriate sample size of 100 items.The following two misstatements were identified as a result of the substantive tests: Recorded Balarice Audited Value \ 20,000 \ 16,000 \ 5,000 \ 2,000 Assume that Zimmerman's parameters included a tolerable misstatement of $60,000 and a risk of incorrect acceptance of 5 percent.(Confidence factors for a 5 percent risk of incorrect acceptance are shown below): Gverstatemert Factor ETcrs 0 3.00 1 4.75 2 6.30 Which of the following is not true with respect to the above?

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

The total amount of misstatement identified in a sample is referred to as the:

In a classical variables sampling application,the sample size will be smaller when the:

The amount at which an item would be recorded assuming no mistakes in judgment or incorrect applications of generally accepted accounting principles were made is the:

When performing substantive procedures,auditors run the sampling risk(s)of: