Question 1

Which of the following is not true with respect to the use of statistical and nonstatistical sampling?

Accepted Answer

A) Statistical sampling allows the auditor to quantitatively measure the sufficiency of evidence gathered. 
B) Statistical sampling does not require auditors to utilize extensive judgment during the sampling process. 
C) Statistical sampling allows the auditor to make quantitative statements with respect to the results of the sampling procedures. 
D) Both statistical and nonstatistical sampling are permissible under generally accepted auditing standards. 
A) Statistical sampling allows the auditor to quantitatively measure the sufficiency of evidence gathered. 
B) Statistical sampling does not require auditors to utilize extensive judgment during the sampling process. 
C) Statistical sampling allows the auditor to make quantitative statements with respect to the results of the sampling procedures. 
D) Both statistical and nonstatistical sampling are permissible under generally accepted auditing standards. B

Question 2

Which of the following sampling risks is associated with the use of variables sampling?

Accepted Answer

A) Risk of underreliance: Yes; Risk of incorrect rejection: Yes 
B) Risk of underreliance: Yes; Risk of incorrect rejection: No 
C) Risk of underreliance: No; Risk of incorrect rejection: Yes 
D) Risk of underreliance: No; Risk of incorrect rejection: No 
A) Risk of underreliance: Yes; Risk of incorrect rejection: Yes 
B) Risk of underreliance: Yes; Risk of incorrect rejection: No 
C) Risk of underreliance: No; Risk of incorrect rejection: Yes 
D) Risk of underreliance: No; Risk of incorrect rejection: No C

Question 3

The upper limit on misstatement is:

Accepted Answer

A) An adjustment of the sample estimate of misstatement to reflect the desired level of sampling risk. 
B) An adjustment of the sample deviation rate to reflect the desired level of sampling risk. 
C) The maximum rate of deviation that could exist before auditors would reduce the reliance on an internal control. 
D) The maximum misstatement that could exist before auditors would conclude that the account balance is not fairly stated. 
A) An adjustment of the sample estimate of misstatement to reflect the desired level of sampling risk. 
B) An adjustment of the sample deviation rate to reflect the desired level of sampling risk. 
C) The maximum rate of deviation that could exist before auditors would reduce the reliance on an internal control. 
D) The maximum misstatement that could exist before auditors would conclude that the account balance is not fairly stated. A

Question 4

When evaluating the effectiveness of a client's internal controls with a tolerable rate of deviation of 5 percent,the audit team determined the upper limit rate of deviation to be 4 percent.Based on this information,which of the following decisions would the audit team most likely make?

Accepted Answer

A) Reduce the planned degree of reliance on internal controls. 
B) Increase the extent of further audit procedures. 
C) Rely on internal controls as planned. 
D) Expand the sample to examine additional applications of the control. 
A) Reduce the planned degree of reliance on internal controls. 
B) Increase the extent of further audit procedures. 
C) Rely on internal controls as planned. 
D) Expand the sample to examine additional applications of the control.

Question 5

Which of the following sampling activities is not performed during the planning stage of the audit?

Accepted Answer

A) Define the population. 
B) Determine the sample size. 
C) Determine the objective of sampling. 
D) Define the characteristic of interest. 
A) Define the population. 
B) Determine the sample size. 
C) Determine the objective of sampling. 
D) Define the characteristic of interest.

Question 6

When considering the results of an attributes sampling application,the auditor compares which of the following two measures?

Accepted Answer

A) Upper limit rate of deviation; sample rate of deviation. 
B) Tolerable rate of deviation; sample rate of deviation. 
C) Expected rate of deviation; upper limit rate of deviation. 
D) Upper limit rate of deviation; tolerable rate of deviation. 
A) Upper limit rate of deviation; sample rate of deviation. 
B) Tolerable rate of deviation; sample rate of deviation. 
C) Expected rate of deviation; upper limit rate of deviation. 
D) Upper limit rate of deviation; tolerable rate of deviation.

Question 7

Which of the following allow the auditor to limit the exposure to sampling risk?

Accepted Answer

A) Determining an appropriate sample size: Yes; Performing an appropriate audit procedure: Yes 
B) Determining an appropriate sample size: Yes; Performing an appropriate audit procedure: No 
C) Determining an appropriate sample size: No; Performing an appropriate audit procedure: Yes 
D) Determining an appropriate sample size: No; Performing an appropriate audit procedure: No 
A) Determining an appropriate sample size: Yes; Performing an appropriate audit procedure: Yes 
B) Determining an appropriate sample size: Yes; Performing an appropriate audit procedure: No 
C) Determining an appropriate sample size: No; Performing an appropriate audit procedure: Yes 
D) Determining an appropriate sample size: No; Performing an appropriate audit procedure: No

Question 8

The precision interval has a ____ percent probability of including the ____.

Accepted Answer

A) Sampling risk; adjusted sample estimate. 
B) Sampling risk; true population value. 
C) 1 minus sampling risk; adjusted sample estimate. 
D) 1 minus sampling risk; true population value. 
A) Sampling risk; adjusted sample estimate. 
B) Sampling risk; true population value. 
C) 1 minus sampling risk; adjusted sample estimate. 
D) 1 minus sampling risk; true population value.

Question 9

Which of the following types of sampling applications can appropriately be used under generally accepted auditing standards?

Accepted Answer

A) Statistical sampling: Yes; Nonstatistical sampling: Yes 
B) Statistical sampling: Yes; Nonstatistical sampling: No 
C) Statistical sampling: No; Nonstatistical sampling: Yes 
D) Statistical sampling: No; Nonstatistical sampling: No 
A) Statistical sampling: Yes; Nonstatistical sampling: Yes 
B) Statistical sampling: Yes; Nonstatistical sampling: No 
C) Statistical sampling: No; Nonstatistical sampling: Yes 
D) Statistical sampling: No; Nonstatistical sampling: No

Question 10

Below are descriptions representing different sampling risks associated with attributes and variables sampling.Indicate,using the correct letter,which term is most closely associated with the definition.Each term is associated with only one description.
A.Risk of incorrect acceptance.
B.Risk of overreliance.
C.Risk of incorrect rejection.
D.Risk of underreliance.1___.The auditor concludes that the account balance is fairly stated when,in fact,it is misstated.2___.The auditor's sample indicates that the client's control policies and procedures are not functioning effectively.3___.The client's internal controls are not functioning effectively.4___.The auditor's substantive procedures reveal that the client's account balance is not fairly stated.

Accepted Answer

The answer of Below are descriptions representing different sampling risks...

Question 11

Which of the following activities is least likely to result in the audit team's exposure to sampling risk?

Accepted Answer

A) Identifying all components of a client's accounts receivable balance. 
B) Determining the appropriate number of components of a client's accounts receivable balance for confirmation. 
C) Selecting components of a client's accounts receivable balance for confirmation. 
D) Evaluating confirmations returned from the client's customers and following up on any discrepancies noted by the customers. 
A) Identifying all components of a client's accounts receivable balance. 
B) Determining the appropriate number of components of a client's accounts receivable balance for confirmation. 
C) Selecting components of a client's accounts receivable balance for confirmation. 
D) Evaluating confirmations returned from the client's customers and following up on any discrepancies noted by the customers.

Question 12

In a sampling application to determine the average age of employees in management positions,the sample estimate was 50 years,reliability was 80 percent,and precision was 10 years.Which of the following would most likely result from an increase in the desired level of reliability to 90 percent?

Accepted Answer

A) The sample estimate would increase to 55 years. 
B) The precision interval would be 40 to 60 years. 
C) The precision interval would be 35 to 65 years. 
D) The precision interval would have a lower probability of including the true (unknown)population average. 
A) The sample estimate would increase to 55 years. 
B) The precision interval would be 40 to 60 years. 
C) The precision interval would be 35 to 65 years. 
D) The precision interval would have a lower probability of including the true (unknown)population average.

Question 13

Which of the following steps in the sampling process is ordinarily performed last?

Accepted Answer

A) Determine the objective of sampling. 
B) Measure sample items. 
C) Evaluate the sample results. 
D) Define the characteristic of interest. 
A) Determine the objective of sampling. 
B) Measure sample items. 
C) Evaluate the sample results. 
D) Define the characteristic of interest.

Question 14

Tests performed by auditors that examine evidence for both control attributes and monetary misstatements are known as:

Accepted Answer

A) Standard-purpose tests. 
B) Multi-function tests. 
C) Dual-purpose tests. 
D) Substantive tests. 
A) Standard-purpose tests. 
B) Multi-function tests. 
C) Dual-purpose tests. 
D) Substantive tests.

Question 15

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 only selects 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 only selects 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 16

Which of the following most closely represents an unrestricted random selection procedure?

Accepted Answer

A) Identifying a starting point within the population and bypassing a fixed number of items. 
B) Matching items in the population to a series of randomly-selected numbers. 
C) Randomly selecting invoices to customers whose last names start with "W". 
D) Randomly picking items from an accounts receivable file. 
A) Identifying a starting point within the population and bypassing a fixed number of items. 
B) Matching items in the population to a series of randomly-selected numbers. 
C) Randomly selecting invoices to customers whose last names start with "W". 
D) Randomly picking items from an accounts receivable file.

Question 17

A sample selection method in which a series of contiguous items are selected from the population is referred to as:

Accepted Answer

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

Question 18

Why is defining the population so important in a sampling application?

Accepted Answer

A) To permit the auditor to select the appropriate type of substantive procedure. 
B) To ensure that the results appropriately represent the entire population. 
C) To reduce sampling risk to the appropriate level. 
D) To allow the auditor to appropriately measure sample items. 
A) To permit the auditor to select the appropriate type of substantive procedure. 
B) To ensure that the results appropriately represent the entire population. 
C) To reduce sampling risk to the appropriate level. 
D) To allow the auditor to appropriately measure sample items.

Question 19

Assume that the audit team wishes to determine the extent to which a particular control policy was functioning as intended.Identifying applications of the control throughout the period under audit would be most closely related to which of the following steps in sampling?

Accepted Answer

A) Determining the objective of sampling. 
B) Defining the characteristic of interest. 
C) Defining the population. 
D) Determining the sample size. 
A) Determining the objective of sampling. 
B) Defining the characteristic of interest. 
C) Defining the population. 
D) Determining the sample size.

Question 20

Fishkin,CPA,is attempting to determine whether the average height of a player on a basketball team is greater than 80 inches.Based on his sample of basketball players,he determined an estimate of 76 inches with an associated precision of 10 inches.The confidence in this estimate is 90 percent.
A.What is the precision interval associated with Fishkin's sample?
B.Based on this sampling interval,what is Fishkin's conclusion?
C.If Fishkin wanted a higher level of confidence in his sample estimate,would the precision be more or less than 10 inches?

Accepted Answer

A.The precision interval is 66 inches to

Which of the following is not true with respect to the use of statistical and nonstatistical sampling?

Which of the following sampling risks is associated with the use of variables sampling?

The upper limit on misstatement is:

When evaluating the effectiveness of a client's internal controls with a tolerable rate of deviation of 5 percent,the audit team determined the upper limit rate of deviation to be 4 percent.Based on this information,which of the following decisions would the audit team most likely make?

Which of the following sampling activities is not performed during the planning stage of the audit?

When considering the results of an attributes sampling application,the auditor compares which of the following two measures?

Which of the following allow the auditor to limit the exposure to sampling risk?

The precision interval has a percent probability of including the .

Which of the following types of sampling applications can appropriately be used under generally accepted auditing standards?

Which of the following activities is least likely to result in the audit team's exposure to sampling risk?

In a sampling application to determine the average age of employees in management positions,the sample estimate was 50 years,reliability was 80 percent,and precision was 10 years.Which of the following would most likely result from an increase in the desired level of reliability to 90 percent?

Which of the following steps in the sampling process is ordinarily performed last?

Tests performed by auditors that examine evidence for both control attributes and monetary misstatements are known as:

Which of the following statements best describes nonstatistical sampling?

Which of the following most closely represents an unrestricted random selection procedure?

A sample selection method in which a series of contiguous items are selected from the population is referred to as:

Why is defining the population so important in a sampling application?

Assume that the audit team wishes to determine the extent to which a particular control policy was functioning as intended.Identifying applications of the control throughout the period under audit would be most closely related to which of the following steps in sampling?

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 Audits, Governmental Audits, and Fraud Examinations

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Exam 17: Overview of Sampling

Which of the following is not true with respect to the use of statistical and nonstatistical sampling?

Which of the following sampling risks is associated with the use of variables sampling?

The upper limit on misstatement is:

When evaluating the effectiveness of a client's internal controls with a tolerable rate of deviation of 5 percent,the audit team determined the upper limit rate of deviation to be 4 percent.Based on this information,which of the following decisions would the audit team most likely make?

Which of the following sampling activities is not performed during the planning stage of the audit?

When considering the results of an attributes sampling application,the auditor compares which of the following two measures?

Which of the following allow the auditor to limit the exposure to sampling risk?

The precision interval has a ____ percent probability of including the ____.

Which of the following types of sampling applications can appropriately be used under generally accepted auditing standards?

Which of the following activities is least likely to result in the audit team's exposure to sampling risk?

In a sampling application to determine the average age of employees in management positions,the sample estimate was 50 years,reliability was 80 percent,and precision was 10 years.Which of the following would most likely result from an increase in the desired level of reliability to 90 percent?

Which of the following steps in the sampling process is ordinarily performed last?

Tests performed by auditors that examine evidence for both control attributes and monetary misstatements are known as:

Which of the following statements best describes nonstatistical sampling?

Which of the following most closely represents an unrestricted random selection procedure?

A sample selection method in which a series of contiguous items are selected from the population is referred to as:

Why is defining the population so important in a sampling application?

Assume that the audit team wishes to determine the extent to which a particular control policy was functioning as intended.Identifying applications of the control throughout the period under audit would be most closely related to which of the following steps in sampling?

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 Audits, Governmental Audits, and Fraud Examinations

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

The precision interval has a percent probability of including the .