Question 1

Which of the following statements is true with regard to sampling?

Accepted Answer

A) Sampling can only be used in situations in which the population is relatively homogenous in nature. 
B) Sampling is typically more efficient than examining the entire population. 
C) Sampling is typically more effective than examining the entire population. 
D) Sampling should be used when the need for more precise information is important. 
A) Sampling can only be used in situations in which the population is relatively homogenous in nature. 
B) Sampling is typically more efficient than examining the entire population. 
C) Sampling is typically more effective than examining the entire population. 
D) Sampling should be used when the need for more precise information is important.

Question 2

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 with 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 with a higher level of exposure to nonsampling risk compared to other selection procedures.

Question 3

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

Accepted Answer

A) Tolerable misstatement: Yes; Expected error: Yes 
B) Tolerable misstatement: Yes; Expected error: No 
C) Tolerable misstatement: No; Expected error: Yes 
D) Tolerable misstatement: No; Expected error: No 
A) Tolerable misstatement: Yes; Expected error: Yes 
B) Tolerable misstatement: Yes; Expected error: No 
C) Tolerable misstatement: No; Expected error: Yes 
D) Tolerable misstatement: No; Expected error: No

Question 4

In each of the following situations,indicate whether attribute (A)or variables (V)sampling is used.
1___.Observe a sample of employees at various cash registers to ensure they log in to the system before they can begin processing transactions,and subsequently log out when their shift is over to prevent unauthorized access to the cash registers.
2___.Select a sample of purchase orders and ensure they are from vendors on the approved vendor list.
3___.Select a sample of unpaid vendor invoices and determine a projected balance for accounts payable.
4___.Select a sample of perishable items from inventory to see if they have exceeded their expiration date.
5___.Select a sample of accounts receivable transactions to determine the accuracy of the current period's bad debt expense.
6___.Send confirmations of the account balance for debt obligations greater than the materiality threshold.

Accepted Answer

1.A; 2.A;

Question 5

Which of the following characteristics of substantive procedures is most closely associated with the use of sampling?

Accepted Answer

A) Extent of further audit procedures. 
B) Nature of further audit procedures. 
C) Timing of further audit procedures. 
D) All of the above are closely associated with the use of sampling. 
A) Extent of further audit procedures. 
B) Nature of further audit procedures. 
C) Timing of further audit procedures. 
D) All of the above are closely associated with the use of sampling.

Question 6

Hannah, CPA, identified 30 random numbers using a computerized random number program and matched these numbers to items in the population.

Accepted Answer

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

Question 7

Which of the following does not have a direct relationship with sample size?

Accepted Answer

A) Expected population deviation rate. 
B) Population size. 
C) Risk of overreliance. 
D) All of the above have a direct relationship with sample size. 
A) Expected population deviation rate. 
B) Population size. 
C) Risk of overreliance. 
D) All of the above have a direct relationship with sample size.

Question 8

An auditor using variables sampling to perform substantive procedures concludes that the account balance is misstated.This conclusion is the result of which of the following?

Accepted Answer

A) The actual rate of deviation is greater than the tolerable rate of deviation. 
B) The upper limit on misstatement is less than the tolerable misstatement. 
C) The upper limit rate of deviation is less than the tolerable rate of deviation. 
D) The upper limit on misstatement is greater than the tolerable misstatement. 
A) The actual rate of deviation is greater than the tolerable rate of deviation. 
B) The upper limit on misstatement is less than the tolerable misstatement. 
C) The upper limit rate of deviation is less than the tolerable rate of deviation. 
D) The upper limit on misstatement is greater than the tolerable misstatement.

Question 9

Which of the following sample selection techniques can be used with statistical sampling applications? $$\begin{array} { l c c } 
& \text { Blach selection } & \text { Haphazar selection } \
\text { A } & \mathrm { Yet } & \mathrm { Na } \
\mathrm { B } . & \mathrm { Yet } & \mathrm { Yet } \
\text { C. } & \mathrm { Na } & \mathrm { Yes } \
\text { D. } & \mathrm { Na } & \mathrm { Na }
\end{array}$$

Accepted Answer

The answer of Which of the following sample selection techniques...

Question 10

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 11

In the study of internal control,the auditor uses sampling to compare the _____________to the ______________.

Accepted Answer

A) Adjusted estimate of misstatement; overall materiality. 
B) Sampling risk; precision. 
C) Adjusted estimate of the deviation rate; tolerable rate of deviation. 
D) Precision interval; upper limit on misstatement. 
A) Adjusted estimate of misstatement; overall materiality. 
B) Sampling risk; precision. 
C) Adjusted estimate of the deviation rate; tolerable rate of deviation. 
D) Precision interval; upper limit on misstatement.

Question 12

Selecting the first five sales orders processed each month for examination is an example of which of the following types of selection method?

Accepted Answer

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

Question 13

In which of the following situations would the use of sampling be most appropriate?

Accepted Answer

A) The need for precise information is less important. 
B) The number of items comprising the population is smaller. 
C) The likelihood of selecting a representative sample is relatively low. 
D) The use of sampling would be appropriate in all of the above situations. 
A) The need for precise information is less important. 
B) The number of items comprising the population is smaller. 
C) The likelihood of selecting a representative sample is relatively low. 
D) The use of sampling would be appropriate in all of the above situations.

Question 14

An auditor is reviewing a sample of cash disbursements to ensure that the appropriate supporting documents were received prior to payment.Which type of sampling approach would the auditor use to perform this test?

Accepted Answer

A) Collective sampling. 
B) Attributes sampling. 
C) Variables sampling. 
D) Quality sampling. 
A) Collective sampling. 
B) Attributes sampling. 
C) Variables sampling. 
D) Quality sampling.

Question 15

Which of the following is the least likely outcome when the upper limit on misstatement exceeds the tolerable misstatement?

Accepted Answer

A) The auditor would be exposed to the risk of incorrect rejection. 
B) The auditor would be exposed to an efficiency loss. 
C) The auditor would consider expanding the sample to evaluate additional transactions or components of the account balance. 
D) The auditor would conclude that the account balance is fairly stated. 
A) The auditor would be exposed to the risk of incorrect rejection. 
B) The auditor would be exposed to an efficiency loss. 
C) The auditor would consider expanding the sample to evaluate additional transactions or components of the account balance. 
D) The auditor would conclude that the account balance is fairly stated.

Question 16

Place the following steps in the sampling process in the order in which they are performed. 1 = Measure sample items
2 = Select sample items
3 = Define the population

Accepted Answer

A) 1,2,3. 
B) 3,1,2. 
C) 2,1,3. 
D) 3,2,1. 
A) 1,2,3. 
B) 3,1,2. 
C) 2,1,3. 
D) 3,2,1.

Question 17

Why does the risk of incorrect rejection result in an efficiency loss to the auditor?

Accepted Answer

A) Additional time is necessary to propose adjustments to the client's account balances. 
B) The auditor typically expands the sample to examine additional components or transactions of the account balance. 
C) More detailed audit procedures are performed on sample items already examined by the auditor. 
D) The auditor typically extends the study of internal control to attempt to obtain a reduction in the level of risk of material misstatement. 
A) Additional time is necessary to propose adjustments to the client's account balances. 
B) The auditor typically expands the sample to examine additional components or transactions of the account balance. 
C) More detailed audit procedures are performed on sample items already examined by the auditor. 
D) The auditor typically extends the study of internal control to attempt to obtain a reduction in the level of risk of material misstatement.

Question 18

What is the primary drawback with respect to the use of sampling?

Accepted Answer

A) Individuals may fail to obtain a true understanding of the question they are examining. 
B) The time spent in planning and selecting the sample may exceed the time savings from examining only a subset of the items. 
C) The conclusion reached by examining a sample of items may differ from the conclusion that would be reached if the entire population were examined. 
D) Sampling cannot be used to examine account balances that are material to the financial statements. 
A) Individuals may fail to obtain a true understanding of the question they are examining. 
B) The time spent in planning and selecting the sample may exceed the time savings from examining only a subset of the items. 
C) The conclusion reached by examining a sample of items may differ from the conclusion that would be reached if the entire population were examined. 
D) Sampling cannot be used to examine account balances that are material to the financial statements.

Question 19

An auditor discovers that an account balance believed not to be materially misstated based on an audit sample was materially misstated based on the total population of the account balance.This is an example of which of the following types of sampling risks?

Accepted Answer

A) Incorrect rejection. 
B) Incorrect acceptance. 
C) Overreliance. 
D) Underreliance. 
A) Incorrect rejection. 
B) Incorrect acceptance. 
C) Overreliance. 
D) Underreliance.

Question 20

Which of the following does not affect the sample size in an attributes sampling application?

Accepted Answer

A) Expected population deviation rate. 
B) Upper limit rate of deviation. 
C) Sampling risk. 
D) Tolerable rate of deviation. 
A) Expected population deviation rate. 
B) Upper limit rate of deviation. 
C) Sampling risk. 
D) Tolerable rate of deviation.

Which of the following statements is true with regard to sampling?

A disadvantage of using a systematic random selection procedure is that:

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

Which of the following characteristics of substantive procedures is most closely associated with the use of sampling?

Hannah, CPA, identified 30 random numbers using a computerized random number program and matched these numbers to items in the population.

Which of the following does not have a direct relationship with sample size?

An auditor using variables sampling to perform substantive procedures concludes that the account balance is misstated.This conclusion is the result of which of the following?

Which of the following sample selection techniques can be used with statistical sampling applications? Blach selection Haphazar selection A . C. D.

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?

In the study of internal control,the auditor uses sampling to compare the _to the __.

Selecting the first five sales orders processed each month for examination is an example of which of the following types of selection method?

In which of the following situations would the use of sampling be most appropriate?

An auditor is reviewing a sample of cash disbursements to ensure that the appropriate supporting documents were received prior to payment.Which type of sampling approach would the auditor use to perform this test?

Which of the following is the least likely outcome when the upper limit on misstatement exceeds the tolerable misstatement?

Place the following steps in the sampling process in the order in which they are performed. 1 = Measure sample items 2 = Select sample items 3 = Define the population

Why does the risk of incorrect rejection result in an efficiency loss to the auditor?

What is the primary drawback with respect to the use of sampling?

An auditor discovers that an account balance believed not to be materially misstated based on an audit sample was materially misstated based on the total population of the account balance.This is an example of which of the following types of sampling risks?

Which of the following does not affect the sample size in an attributes sampling application?

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 statements is true with regard to sampling?

A disadvantage of using a systematic random selection procedure is that:

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

Which of the following characteristics of substantive procedures is most closely associated with the use of sampling?

Hannah, CPA, identified 30 random numbers using a computerized random number program and matched these numbers to items in the population.

Which of the following does not have a direct relationship with sample size?

An auditor using variables sampling to perform substantive procedures concludes that the account balance is misstated.This conclusion is the result of which of the following?

Which of the following sample selection techniques can be used with statistical sampling applications? Blach selection Haphazar selection A . C. D.

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?

In the study of internal control,the auditor uses sampling to compare the _____________to the ______________.

Selecting the first five sales orders processed each month for examination is an example of which of the following types of selection method?

In which of the following situations would the use of sampling be most appropriate?

An auditor is reviewing a sample of cash disbursements to ensure that the appropriate supporting documents were received prior to payment.Which type of sampling approach would the auditor use to perform this test?

Which of the following is the least likely outcome when the upper limit on misstatement exceeds the tolerable misstatement?

Place the following steps in the sampling process in the order in which they are performed. 1 = Measure sample items 2 = Select sample items 3 = Define the population

Why does the risk of incorrect rejection result in an efficiency loss to the auditor?

What is the primary drawback with respect to the use of sampling?

An auditor discovers that an account balance believed not to be materially misstated based on an audit sample was materially misstated based on the total population of the account balance.This is an example of which of the following types of sampling risks?

Which of the following does not affect the sample size in an attributes sampling application?

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

In the study of internal control,the auditor uses sampling to compare the _to the __.