Question 1

The auditor gathers evidence about whether balance sheet and income statement accounts are materially misstated by

Accepted Answer

A) performing tests of controls 
B) the sample selection method 
C) the sample evaluation method 
D) performing substantive tests of details 
A) performing tests of controls 
B) the sample selection method 
C) the sample evaluation method 
D) performing substantive tests of details

Question 2

Audit risk is

Accepted Answer

A) the risk that material misstatements occur in the financial statements 
B) the risk that material misstatements occur in the financial statements and are not detected by the auditor 
C) the risk that material misstatements occur and are not detected by the auditor 
D) the risk that misstatements occur in the financial statements and are not detected by the auditor 
A) the risk that material misstatements occur in the financial statements 
B) the risk that material misstatements occur in the financial statements and are not detected by the auditor 
C) the risk that material misstatements occur and are not detected by the auditor 
D) the risk that misstatements occur in the financial statements and are not detected by the auditor

Question 3

The auditor believes that the characteristics of the population

Accepted Answer

A) will be represented in a sample 
B) will not be represented in a random sample 
C) will likely be represented in a random sample 
D) may be represented in a sample 
A) will be represented in a sample 
B) will not be represented in a random sample 
C) will likely be represented in a random sample 
D) may be represented in a sample

Question 4

Nonstatistical sampling

Accepted Answer

A) is never a more effective way to gather evidence 
B) is a less efficient way to gather evidence 
C) may be a less efficient way to gather evidence 
D) should be viewed as a less effective way to gather evidence 
E) should not be viewed as a less effective way to gather evidence
F)both A and C
G)both B and D
H)Both C and E 
A) is never a more effective way to gather evidence 
B) is a less efficient way to gather evidence 
C) may be a less efficient way to gather evidence 
D) should be viewed as a less effective way to gather evidence 
E) should not be viewed as a less effective way to gather evidence
F)both A and C
G)both B and D
H)Both C and E

Question 5

If the projected misstatement is less than the tolerable misstatement,the auditor must

Accepted Answer

A) give appropriate consideration to the sampling risk in the determination of whether the projected misstatement plus sampling risk is greater than the tolerable misstatement 
B) give appropriate consideration to the sampling risk in the determination of whether the projected misstatement plus sampling risk is less than the tolerable misstatement 
C) gather additional evidence to determine the amount of the material misstatement 
D) gather additional evidence to determine the amount of the actual tolerable misstatement 
A) give appropriate consideration to the sampling risk in the determination of whether the projected misstatement plus sampling risk is greater than the tolerable misstatement 
B) give appropriate consideration to the sampling risk in the determination of whether the projected misstatement plus sampling risk is less than the tolerable misstatement 
C) gather additional evidence to determine the amount of the material misstatement 
D) gather additional evidence to determine the amount of the actual tolerable misstatement

Question 6

In a nonstatistical substantive test of transactions for an income statement account,the auditor decides that sales revenue is materially misstated.In this case,the auditor might

Accepted Answer

A) investigate the misstatements in the account and recommend corrections 
B) ask the client to investigate the misstatements in the account and correct them 
C) increase the sample size and perform additional tests to identify the amount of the total misstatement in the income statement 
D) increase the sample size and perform additional tests to reduce the amount of the total misstatement in the account 
E) increase the sample size and perform additional tests to identify the amount of the total misstatement in the account
F)both A and B
G)both C and D
H)Both B and E 
A) investigate the misstatements in the account and recommend corrections 
B) ask the client to investigate the misstatements in the account and correct them 
C) increase the sample size and perform additional tests to identify the amount of the total misstatement in the income statement 
D) increase the sample size and perform additional tests to reduce the amount of the total misstatement in the account 
E) increase the sample size and perform additional tests to identify the amount of the total misstatement in the account
F)both A and B
G)both C and D
H)Both B and E

Question 7

For a statistical sample,sampling risk is determined by auditor judgment.

Accepted Answer

A) True 
 B)False

Question 8

If the projected misstatement is greater than the tolerable misstatement,the auditor must

Accepted Answer

A) give appropriate consideration to the sampling risk in the determination of whether the projected misstatement plus sampling risk is greater than the tolerable misstatement 
B) give appropriate consideration to the sampling risk in the determination of whether the projected misstatement plus sampling risk is less than the tolerable misstatement 
C) gather additional evidence to determine the amount of the material misstatement 
D) gather additional evidence to determine the amount of the actual tolerable misstatement 
A) give appropriate consideration to the sampling risk in the determination of whether the projected misstatement plus sampling risk is greater than the tolerable misstatement 
B) give appropriate consideration to the sampling risk in the determination of whether the projected misstatement plus sampling risk is less than the tolerable misstatement 
C) gather additional evidence to determine the amount of the material misstatement 
D) gather additional evidence to determine the amount of the actual tolerable misstatement

Question 9

Tolerable misstatement is defined as

Accepted Answer

A) the level of assurance that the account balance or class of transactions is not misstated 
B) the amount of misstatement,on the basis of the auditor's professional judgment,that should be present in the account balance or class of transactions 
C) the maximum misstatement in the account balance or class of transactions that the auditor is willing to accept 
D) the level of audit risk the auditor is willing to accept 
A) the level of assurance that the account balance or class of transactions is not misstated 
B) the amount of misstatement,on the basis of the auditor's professional judgment,that should be present in the account balance or class of transactions 
C) the maximum misstatement in the account balance or class of transactions that the auditor is willing to accept 
D) the level of audit risk the auditor is willing to accept

Question 10

The population for a substantive test of details consists of

Accepted Answer

A) all events in the accounts or class of transactions 
B) all material items in the accounts or class of transactions 
C) all material events in the accounts or class of transactions 
D) all items in the accounts at the end of the year 
E) all transactions in the class of transactions for the entire year
F)both A and B
G)both C and D
H)Both D and E 
A) all events in the accounts or class of transactions 
B) all material items in the accounts or class of transactions 
C) all material events in the accounts or class of transactions 
D) all items in the accounts at the end of the year 
E) all transactions in the class of transactions for the entire year
F)both A and B
G)both C and D
H)Both D and E

Question 11

The known and likely misstatements will be added to the proposed audit adjustment schedule,so that

Accepted Answer

A) the auditor can consider these misstatements to determine whether the financial statements as a whole are materially misstated 
B) the auditor can consider these misstatements in combination with the other misstatements found to determine whether the financial statements as a whole are materially misstated 
C) the auditor can consider these misstatements in combination with the other misstatements found to determine whether the financial statements as a whole are fairly presented 
D) the auditor can consider these misstatements to determine whether the financial statements as a whole are fairly presented 
A) the auditor can consider these misstatements to determine whether the financial statements as a whole are materially misstated 
B) the auditor can consider these misstatements in combination with the other misstatements found to determine whether the financial statements as a whole are materially misstated 
C) the auditor can consider these misstatements in combination with the other misstatements found to determine whether the financial statements as a whole are fairly presented 
D) the auditor can consider these misstatements to determine whether the financial statements as a whole are fairly presented

Question 12

To evaluate the non-statistical sample,the auditor uses

Accepted Answer

A) probability tables 
B) professional judgment 
C) the level of tolerance 
D) the confidence interval 
A) probability tables 
B) professional judgment 
C) the level of tolerance 
D) the confidence interval

Question 13

Sampling would not be used to

Accepted Answer

A) recalculate 
B) make inquiries 
C) confirm 
D) perform analytical procedures 
E) reperform
F)both B and D
G)both C and D
H)both D and E 
A) recalculate 
B) make inquiries 
C) confirm 
D) perform analytical procedures 
E) reperform
F)both B and D
G)both C and D
H)both D and E

Question 14

The desired level of assurance is defined as

Accepted Answer

A) the level of assurance that the account balance or class of transactions is not misstated 
B) the amount of misstatement,on the basis of the auditor's professional judgment,that should be present in the account balance or class of transactions 
C) the maximum misstatement in the account balance or class of transactions that the auditor is willing to accept 
D) the level of audit risk the auditor is willing to accept 
E) the level of assurance that the tolerable misstatement is exceeded by the actual misstatement
F)both A and B
G)both C and D
H)Both D and E 
A) the level of assurance that the account balance or class of transactions is not misstated 
B) the amount of misstatement,on the basis of the auditor's professional judgment,that should be present in the account balance or class of transactions 
C) the maximum misstatement in the account balance or class of transactions that the auditor is willing to accept 
D) the level of audit risk the auditor is willing to accept 
E) the level of assurance that the tolerable misstatement is exceeded by the actual misstatement
F)both A and B
G)both C and D
H)Both D and E

Question 15

The only thing(s)that must change when the auditor moves from statistical sampling to nonstatistical sampling is (are)

Accepted Answer

A) the sample testing method 
B) the way the auditor evaluates the sample results 
C) the sample evaluation method 
D) the way the auditor obtains the sample results 
E) the sample selection method 
A) the sample testing method 
B) the way the auditor evaluates the sample results 
C) the sample evaluation method 
D) the way the auditor obtains the sample results 
E) the sample selection method

Question 16

The more serious error of the errors associated with the risk of incorrect acceptance and the risk of incorrect rejection is the error related to the

Accepted Answer

A) relevance of the audit 
B) reliability of the audit 
C) effectiveness of the audit 
D) efficiency of the audit 
A) relevance of the audit 
B) reliability of the audit 
C) effectiveness of the audit 
D) efficiency of the audit

Question 17

The auditor gathers evidence about whether balance sheet and income statement accounts are misleading by performing substantive tests of controls.

Accepted Answer

A) True 
 B)False

Question 18

Both statistical and nonstatistical samples require professional judgment in planning the sample,performing the procedures,and evaluating the evidence.

Accepted Answer

A) True 
 B)False

Question 19

How is variables sampling used in substantive testing?

Accepted Answer

Variables sampling is the application of

Question 20

Sampling risk for substantive testing includes

Accepted Answer

A) the risk of incorrect sample selection 
B) the risk of incorrect sample evaluation 
C) the risk of incorrect planning for sample selection 
D) the risk of incorrect acceptance of the account balance or class of transactions 
E) the risk of incorrect rejection of the account balance or class of transactions
F)both A and C
G)both B and E
H)Both D and E 
A) the risk of incorrect sample selection 
B) the risk of incorrect sample evaluation 
C) the risk of incorrect planning for sample selection 
D) the risk of incorrect acceptance of the account balance or class of transactions 
E) the risk of incorrect rejection of the account balance or class of transactions
F)both A and C
G)both B and E
H)Both D and E

The auditor gathers evidence about whether balance sheet and income statement accounts are materially misstated by

Audit risk is

The auditor believes that the characteristics of the population

Nonstatistical sampling

If the projected misstatement is less than the tolerable misstatement,the auditor must

In a nonstatistical substantive test of transactions for an income statement account,the auditor decides that sales revenue is materially misstated.In this case,the auditor might

For a statistical sample,sampling risk is determined by auditor judgment.

If the projected misstatement is greater than the tolerable misstatement,the auditor must

Tolerable misstatement is defined as

The population for a substantive test of details consists of

The known and likely misstatements will be added to the proposed audit adjustment schedule,so that

To evaluate the non-statistical sample,the auditor uses

Sampling would not be used to

The desired level of assurance is defined as

The only thing(s)that must change when the auditor moves from statistical sampling to nonstatistical sampling is (are)

The more serious error of the errors associated with the risk of incorrect acceptance and the risk of incorrect rejection is the error related to the

The auditor gathers evidence about whether balance sheet and income statement accounts are misleading by performing substantive tests of controls.

Both statistical and nonstatistical samples require professional judgment in planning the sample,performing the procedures,and evaluating the evidence.

How is variables sampling used in substantive testing?

Sampling risk for substantive testing includes

What Is Auditing

The Audit Planning Process: Understanding the Risk of Material Misstatement

Internal Controls

Auditing the Revenue Business Process

Audit Evidence and the Auditors Responsibility for Fraud Detection

Auditing the Acquisition and Expenditure Business Process

Auditing the Inventory Business Process

Audit Sampling: Tests of Internal Controls

Cash and Investment Business Processes

Long-Term Debt and Owners Equity Business Process

Completing the Audit

Audit Reports

The Auditing Profession Glossary

Filters

Exam 9: Audit Sampling: Substantive Tests of Details

The auditor gathers evidence about whether balance sheet and income statement accounts are materially misstated by

Audit risk is

The auditor believes that the characteristics of the population

Nonstatistical sampling

If the projected misstatement is less than the tolerable misstatement,the auditor must

In a nonstatistical substantive test of transactions for an income statement account,the auditor decides that sales revenue is materially misstated.In this case,the auditor might

For a statistical sample,sampling risk is determined by auditor judgment.

If the projected misstatement is greater than the tolerable misstatement,the auditor must

Tolerable misstatement is defined as

The population for a substantive test of details consists of

The known and likely misstatements will be added to the proposed audit adjustment schedule,so that

To evaluate the non-statistical sample,the auditor uses

Sampling would not be used to

The desired level of assurance is defined as

The only thing(s)that must change when the auditor moves from statistical sampling to nonstatistical sampling is (are)

The more serious error of the errors associated with the risk of incorrect acceptance and the risk of incorrect rejection is the error related to the

The auditor gathers evidence about whether balance sheet and income statement accounts are misleading by performing substantive tests of controls.

Both statistical and nonstatistical samples require professional judgment in planning the sample,performing the procedures,and evaluating the evidence.

How is variables sampling used in substantive testing?

Sampling risk for substantive testing includes

What Is Auditing

The Audit Planning Process: Understanding the Risk of Material Misstatement

Internal Controls

Auditing the Revenue Business Process

Audit Evidence and the Auditors Responsibility for Fraud Detection

Auditing the Acquisition and Expenditure Business Process

Auditing the Inventory Business Process

Audit Sampling: Tests of Internal Controls

Cash and Investment Business Processes

Long-Term Debt and Owners Equity Business Process

Completing the Audit

Audit Reports

The Auditing Profession Glossary

Filters