Question 1

Haphazard selection allows the auditor to select items judgmentally.

Accepted Answer

A) True 
 B)False  False

Question 2

When auditing accounts payable using classical variables sampling,Sue finds evidence indicating that the account may be materially misstated.What are Sue's options?

Accepted Answer

Sue can (1)increase the sample size,(2)perform additional substantive procedures,(3)adjust the account,or (4)issue a qualified or adverse opinion if management refuses to adjust the account.

Question 3

Match between columns
                        Premises:  Tolerable misstatement
 Population size
 Desired confidence level
 Expected misstatement

Accepted Answer

The Answer of Direct and Inverse and Increase and Decrease is...

Question 4

For monetary-unit sampling,the number of items tested is

Accepted Answer

A)  Always equal to sample size. 
B)  Always greater than sample size. 
C)  Always greater than or equal to sample size. 
D)  Always less than or equal to sample size. 
A)  Always equal to sample size. 
B)  Always greater than sample size. 
C)  Always greater than or equal to sample size. 
D)  Always less than or equal to sample size.

Question 5

The purpose of audit sampling is to draw inferences about the entire population from the results of a sample.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following sample planning factors would influence the sample size for a substantive test of details for a specific account?

Accepted Answer

A)  Expected amount of misstatement but not the measure of tolerable misstatement. 
B)  Expected amount of misstatement and the measure of tolerable misstatement. 
C)  Measure of tolerable misstatement but not the expected amount of misstatement. 
D)  Neither the expected amount of misstatement nor the measure of tolerable misstatement. 
A)  Expected amount of misstatement but not the measure of tolerable misstatement. 
B)  Expected amount of misstatement and the measure of tolerable misstatement. 
C)  Measure of tolerable misstatement but not the expected amount of misstatement. 
D)  Neither the expected amount of misstatement nor the measure of tolerable misstatement.

Question 7

Monetary-unit sampling should not be used if

Accepted Answer

A)  The population includes several large items. 
B)  The auditor expects overstatement errors. 
C)  Many items in the account are expected to have errors. 
D)  No items in the account are expected to have errors. 
A)  The population includes several large items. 
B)  The auditor expects overstatement errors. 
C)  Many items in the account are expected to have errors. 
D)  No items in the account are expected to have errors.

Question 8

An auditor is performing substantive procedures of pricing and extension of perpetual inventory balances consisting of a large number of items.Past experience indicates numerous pricing and extension errors.Which of the following statistical sampling approaches is most appropriate?

Accepted Answer

A)  Unstratified mean-per-unit. 
B)  Monetary-unit sampling. 
C)  Stop or go. 
D)  Difference projection. 
A)  Unstratified mean-per-unit. 
B)  Monetary-unit sampling. 
C)  Stop or go. 
D)  Difference projection.

Question 9

The accounting department reports that the balance of accounts receivable is $210,000.You are willing to accept that balance if audit sampling suggests it is within $15,000 of the actual balance.Using a classical variables sampling plan,you compute a 95% confidence interval of $208,000 to $225,000.You would therefore

Accepted Answer

A)  Not be able to determine the acceptability of the receivable balance. 
B)  Accept the balance but with a lower level of confidence. 
C)  Take a larger sample before totally rejecting the balance and requiring adjustments. 
D)  Accept the $210,000 balance because the confidence interval is within the materiality limits. 
A)  Not be able to determine the acceptability of the receivable balance. 
B)  Accept the balance but with a lower level of confidence. 
C)  Take a larger sample before totally rejecting the balance and requiring adjustments. 
D)  Accept the $210,000 balance because the confidence interval is within the materiality limits.

Question 10

What is the primary objective of testing all individually significant items rather than sample testing?

Accepted Answer

A)  To increase the audit risk at which a decision will be reached from the results of the sample selected. 
B)  To increase sample size. 
C)  To accept no sampling risk for items greater than tolerable misstatement. 
D)  To increase the size of the confidence bound around the projected misstatement. 
A)  To increase the audit risk at which a decision will be reached from the results of the sample selected. 
B)  To increase sample size. 
C)  To accept no sampling risk for items greater than tolerable misstatement. 
D)  To increase the size of the confidence bound around the projected misstatement.

Question 11

Monetary-unit sampling is commonly used by auditors to test controls.

Accepted Answer

A) True 
 B)False

Question 12

An auditor has taken a large sample from an audit population that is skewed in the sense that it contains a large number of small dollar balances.The auditor can conclude

Accepted Answer

A)  The sampling distribution is not normal; therefore MUS sampling will more accurately define the nature of the population. 
B)  The sampling distribution is normal; therefore the confidence coefficient value can be used to evaluate the sample results. 
C)  The sampling distribution is not normal; thus attribute sampling is the only alternative statistical tool that can be appropriately used. 
D)  None of the above answers is correct. 
A)  The sampling distribution is not normal; therefore MUS sampling will more accurately define the nature of the population. 
B)  The sampling distribution is normal; therefore the confidence coefficient value can be used to evaluate the sample results. 
C)  The sampling distribution is not normal; thus attribute sampling is the only alternative statistical tool that can be appropriately used. 
D)  None of the above answers is correct.

Question 13

In statistical or nonstatistical sampling methods used in substantive testing,an auditor most likely would stratify a population into meaningful groups if

Accepted Answer

A)  Monetary-unit sampling (MUS) is used. 
B)  The population contains both very high and very low recorded amounts. 
C)  The auditor's estimated tolerable misstatement is extremely small. 
D)  The standard deviation of recorded amounts is relatively small. 
A)  Monetary-unit sampling (MUS) is used. 
B)  The population contains both very high and very low recorded amounts. 
C)  The auditor's estimated tolerable misstatement is extremely small. 
D)  The standard deviation of recorded amounts is relatively small.

Question 14

Expected misstatement is directly related to sample size.

Accepted Answer

A) True 
 B)False

Question 15

In applying classical variables sampling,an auditor attempts to

Accepted Answer

A)  Estimate a qualitative characteristic of interest. 
B)  Determine various rates of occurrence for specified attributes. 
C)  Discover at least one instance of a critical deviation. 
D)  Predict a monetary population value within a range of precision. 
A)  Estimate a qualitative characteristic of interest. 
B)  Determine various rates of occurrence for specified attributes. 
C)  Discover at least one instance of a critical deviation. 
D)  Predict a monetary population value within a range of precision.

Question 16

Which of the following would be an improper technique when using monetary-unit statistical sampling in an audit of accounts receivable?

Accepted Answer

A)  Combining negative and positive dollar misstatements in the appraisal of a sample. 
B)  Using a sampling technique in which the same account balance could be selected more than once. 
C)  Selecting a random starting point and then sampling every nth dollar. 
D)  Defining the sampling unit in the population as an individual dollar and not as an individual account balance. 
A)  Combining negative and positive dollar misstatements in the appraisal of a sample. 
B)  Using a sampling technique in which the same account balance could be selected more than once. 
C)  Selecting a random starting point and then sampling every nth dollar. 
D)  Defining the sampling unit in the population as an individual dollar and not as an individual account balance.

Question 17

In examining cash disbursements,an auditor plans to choose a sample using systematic selection with a random start.The primary advantage of such a systematic selection is that population items

Accepted Answer

A)  That include fraud will not be overlooked when the auditor exercises compatible reciprocal options. 
B)  May occur in a systematic pattern, thus making the sample more representative. 
C)  May occur more than once in a sample. 
D)  Do not have to be prenumbered in order for the auditor to use the technique. 
A)  That include fraud will not be overlooked when the auditor exercises compatible reciprocal options. 
B)  May occur in a systematic pattern, thus making the sample more representative. 
C)  May occur more than once in a sample. 
D)  Do not have to be prenumbered in order for the auditor to use the technique.

Question 18

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?

Accepted Answer

A)  Set the tolerable deviation rate at a lower level than originally planned. 
B)  Identify the large and unusual disbursements as individually significant and test 100 percent. 
C)  Increase the sample size to reduce the effect of the unusually large disbursements. 
D)  Continue to draw new samples until all the unusually large disbursements appear in the sample. 
A)  Set the tolerable deviation rate at a lower level than originally planned. 
B)  Identify the large and unusual disbursements as individually significant and test 100 percent. 
C)  Increase the sample size to reduce the effect of the unusually large disbursements. 
D)  Continue to draw new samples until all the unusually large disbursements appear in the sample.

Question 19

In a monetary-unit sample with a sampling interval of $10,000,an auditor discovered that a selected account receivable with a recorded amount of $5,000 had an audit amount of $2,000.The projected misstatement of this sample was

Accepted Answer

A)  $3,000. 
B)  $4,000. 
C)  $6,000. 
D)  $8,000. 
A)  $3,000. 
B)  $4,000. 
C)  $6,000. 
D)  $8,000.

Question 20

Confidence level is inversely related to sample size.

Accepted Answer

A) True 
 B)False

Haphazard selection allows the auditor to select items judgmentally.

When auditing accounts payable using classical variables sampling,Sue finds evidence indicating that the account may be materially misstated.What are Sue's options?

For monetary-unit sampling,the number of items tested is

The purpose of audit sampling is to draw inferences about the entire population from the results of a sample.

Which of the following sample planning factors would influence the sample size for a substantive test of details for a specific account?

Monetary-unit sampling should not be used if

An auditor is performing substantive procedures of pricing and extension of perpetual inventory balances consisting of a large number of items.Past experience indicates numerous pricing and extension errors.Which of the following statistical sampling approaches is most appropriate?

What is the primary objective of testing all individually significant items rather than sample testing?

Monetary-unit sampling is commonly used by auditors to test controls.

An auditor has taken a large sample from an audit population that is skewed in the sense that it contains a large number of small dollar balances.The auditor can conclude

In statistical or nonstatistical sampling methods used in substantive testing,an auditor most likely would stratify a population into meaningful groups if

Expected misstatement is directly related to sample size.

In applying classical variables sampling,an auditor attempts to

Which of the following would be an improper technique when using monetary-unit statistical sampling in an audit of accounts receivable?

In examining cash disbursements,an auditor plans to choose a sample using systematic selection with a random start.The primary advantage of such a systematic selection is that population items

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?

In a monetary-unit sample with a sampling interval of $10,000,an auditor discovered that a selected account receivable with a recorded amount of $5,000 had an audit amount of $2,000.The projected misstatement of this sample was

Confidence level is inversely related to sample size.

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning,Types of Audit Tests,and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,and Internal Auditing Services

Filters

Exam 9: Audit Sampling: An Application to Substantive Tests of Account Balances

Haphazard selection allows the auditor to select items judgmentally.

When auditing accounts payable using classical variables sampling,Sue finds evidence indicating that the account may be materially misstated.What are Sue's options?

For monetary-unit sampling,the number of items tested is

The purpose of audit sampling is to draw inferences about the entire population from the results of a sample.

Which of the following sample planning factors would influence the sample size for a substantive test of details for a specific account?

Monetary-unit sampling should not be used if

An auditor is performing substantive procedures of pricing and extension of perpetual inventory balances consisting of a large number of items.Past experience indicates numerous pricing and extension errors.Which of the following statistical sampling approaches is most appropriate?

What is the primary objective of testing all individually significant items rather than sample testing?

Monetary-unit sampling is commonly used by auditors to test controls.

An auditor has taken a large sample from an audit population that is skewed in the sense that it contains a large number of small dollar balances.The auditor can conclude

In statistical or nonstatistical sampling methods used in substantive testing,an auditor most likely would stratify a population into meaningful groups if

Expected misstatement is directly related to sample size.

In applying classical variables sampling,an auditor attempts to

Which of the following would be an improper technique when using monetary-unit statistical sampling in an audit of accounts receivable?

In examining cash disbursements,an auditor plans to choose a sample using systematic selection with a random start.The primary advantage of such a systematic selection is that population items

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?

In a monetary-unit sample with a sampling interval of $10,000,an auditor discovered that a selected account receivable with a recorded amount of $5,000 had an audit amount of $2,000.The projected misstatement of this sample was

Confidence level is inversely related to sample size.

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning,Types of Audit Tests,and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,and Internal Auditing Services

Filters