Question 1

Expected 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 2

To obtain the known misstatements for the account balance or class of transactions,auditors

Accepted Answer

A) divide the likely misstatement by the projected misstatement 
B) subtract the likely misstatement from the projected misstatement 
C) add the projected misstatement to the likely misstatement 
D) perform the audit procedure as specified in the audit program and determine the known misstatement from the evidence 
A) divide the likely misstatement by the projected misstatement 
B) subtract the likely misstatement from the projected misstatement 
C) add the projected misstatement to the likely misstatement 
D) perform the audit procedure as specified in the audit program and determine the known misstatement from the evidence

Question 3

The population for a substantive test of balances consists of

Accepted Answer

A) all items in the account for the entire year 
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 
A) all items in the account for the entire year 
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

Question 4

Variables sampling is the application of an audit procedure to less than 100% of an account balance or class of transactions to determine whether the recorded amount is materially misstated.

Accepted Answer

A) True 
 B)False

Question 5

The auditor must define the sampling unit in a way that is

Accepted Answer

A) consistent with the assertion being tested 
B) consistent with the account balance being tested 
C) consistent with the transaction being tested 
D) consistent with the population being tested 
A) consistent with the assertion being tested 
B) consistent with the account balance being tested 
C) consistent with the transaction being tested 
D) consistent with the population being tested

Question 6

Assume that you are the auditor in charge of designing a sampling plan to evaluate the cost of the year-end inventory balance for BCS,Inc.The company uses FIFO costing to determine the cost of its inventory.Additional information is provided below.The total amount of inventory is $10,800,000.The desired level of assurance is 90% (10% risk of incorrect acceptance).The ratio of estimated misstatement to tolerable misstatement is 0.00.The confidence factor is 2.31 from the table in the chapter.Tolerable misstatement is $1,000,000.A partial list of inventory is given below: $$\begin{array} { | l | r | r | } 
\hline \text { Inventory } &{ \text { Cost } } & \begin{array} { l } 
\text { Cumulative } \
\text { item }
\end{array} \
\hline 001 & 4,821 & 4,821 \
\hline 002 & 23,822 & 28,643 \
\hline 003 & 128,119 & 156,762 \
\hline 004 & 36,707 & 193,469 \
\hline 005 & 13,289 & 206,758 \
\hline 006 & 39,385 & 246,143 \
\hline 007 & 95,331 & 341,474 \
\hline 008 & 4,871 & 346,345 \
\hline 009 & 70,321 & 416,666 \
\hline 010 & 4,841 & 421,507 \
\hline 011 & 59,773 & 481,280 \
\hline 012 & 3,763 & 485,043 \
\hline 013 & 61,884 & 546,927 \
\hline 014 & 33,794 & 580,721 \
\hline 015 & 4,971 & 585,692 \
\hline 016 & 48,733 & 634,425 \
\hline 017 & 49,322 & 683,747 \
\hline 018 & 3,748 & 687,495 \
\hline 019 & 29,597 & 717,092 \
\hline 020 & 6,979 & 724,071 \
\hline \ldots & \ldots & \
\hline
\end{array}$$

Accepted Answer

Step 1.Determine the Test Objective
To d

Question 7

What does it mean to say that an auditor uses statistical or nonstatistical sampling?

Accepted Answer

The audit procedures performed under eit

Question 8

Haphazard sampling

Accepted Answer

A) must be used when the items in the population are not pre-numbered documents 
B) is a careless sample 
C) does not use a random number method to select the sample 
D) may be used when the items in the population are not pre-numbered documents 
E) uses a random number method to select the sample
F)both A and C
G)both B and D
H)both D and E 
A) must be used when the items in the population are not pre-numbered documents 
B) is a careless sample 
C) does not use a random number method to select the sample 
D) may be used when the items in the population are not pre-numbered documents 
E) uses a random number method to select the sample
F)both A and C
G)both B and D
H)both D and E

Question 9

The test objective for a substantive test is to determine

Accepted Answer

A) if the account balance or class of transactions is correctly stated 
B) if the account balance or class of transactions is materially misstated 
C) if the sample selected was appropriate for the audit 
D) if the sample resulted in the expected deviation rate 
A) if the account balance or class of transactions is correctly stated 
B) if the account balance or class of transactions is materially misstated 
C) if the sample selected was appropriate for the audit 
D) if the sample resulted in the expected deviation rate

Question 10

To obtain the projected misstatements for the account balance or class of transactions,auditors

Accepted Answer

A) divide the known misstatement by the likely misstatement 
B) subtract the likely misstatement from the known misstatement 
C) add the known misstatement to the likely misstatement 
D) subtract the known misstatement from the likely misstatement 
A) divide the known misstatement by the likely misstatement 
B) subtract the likely misstatement from the known misstatement 
C) add the known misstatement to the likely misstatement 
D) subtract the known misstatement from the likely misstatement

Question 11

Which of the following is a nonstatistical method of selecting a sample that the auditor may decide to use?

Accepted Answer

A) judgmental sampling 
B) haphazard sampling 
C) monetary unit sampling 
D) classical variables sampling 
E) random number sampling
F)both B and C
G)both C and E
H)both D and E 
A) judgmental sampling 
B) haphazard sampling 
C) monetary unit sampling 
D) classical variables sampling 
E) random number sampling
F)both B and C
G)both C and E
H)both D and E

Question 12

If we find misstatements in the sample

Accepted Answer

A) we assume that misstatements similar to the misstatements in the population would be found in the sample 
B) we conclude that misstatements similar to the misstatements in the sample exist in the population 
C) we conclude that the population contains misstatements 
D) we assume that misstatements similar to the misstatements in the sample would be found in the population 
A) we assume that misstatements similar to the misstatements in the population would be found in the sample 
B) we conclude that misstatements similar to the misstatements in the sample exist in the population 
C) we conclude that the population contains misstatements 
D) we assume that misstatements similar to the misstatements in the sample would be found in the population

Question 13

Sampling risk is

Accepted Answer

A) the risk that the sample is not large enough 
B) the risk that the sample is not representative of the population 
C) the risk that the sample contains too many errors 
D) the risk that the sample does not contain enough errors 
A) the risk that the sample is not large enough 
B) the risk that the sample is not representative of the population 
C) the risk that the sample contains too many errors 
D) the risk that the sample does not contain enough errors

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 
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 15

If the auditor has a choice of sample size,he should consider which of the following factors in selecting the correct sample size?

Accepted Answer

A) desired level of misstatement 
B) tolerable misstatement 
C) expected level of assurance 
D) stratification of the population when performed 
E) actual misstatement
F)both A and C
G)both A and E
H)Both B and D 
A) desired level of misstatement 
B) tolerable misstatement 
C) expected level of assurance 
D) stratification of the population when performed 
E) actual misstatement
F)both A and C
G)both A and E
H)Both B and D

Question 16

Variables sampling is used to determine the accuracy of the recorded amount in the population from the evidence in a sample of the population.

Accepted Answer

A) True 
 B)False

Question 17

Auditors control nonsampling risk by

Accepted Answer

A) quantifying the risk 
B) planning and supervising employees 
C) performing analytical procedures 
D) performing tests of controls 
A) quantifying the risk 
B) planning and supervising employees 
C) performing analytical procedures 
D) performing tests of controls

Question 18

Sampling would not be used to

Accepted Answer

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

Question 19

The only thing(s)that might 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
F)both A and C
G)both B and E
H)both D and E 
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
F)both A and C
G)both B and E
H)both D and E

Question 20

The risk of incorrect acceptance of the account balance or class of transactions is an error that affects

Accepted Answer

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

Expected misstatement is defined as

To obtain the known misstatements for the account balance or class of transactions,auditors

The population for a substantive test of balances consists of

Variables sampling is the application of an audit procedure to less than 100% of an account balance or class of transactions to determine whether the recorded amount is materially misstated.

The auditor must define the sampling unit in a way that is

What does it mean to say that an auditor uses statistical or nonstatistical sampling?

Haphazard sampling

The test objective for a substantive test is to determine

To obtain the projected misstatements for the account balance or class of transactions,auditors

Which of the following is a nonstatistical method of selecting a sample that the auditor may decide to use?

If we find misstatements in the sample

Sampling risk is

The desired level of assurance is defined as

If the auditor has a choice of sample size,he should consider which of the following factors in selecting the correct sample size?

Variables sampling is used to determine the accuracy of the recorded amount in the population from the evidence in a sample of the population.

Auditors control nonsampling risk by

Sampling would not be used to

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

The risk of incorrect acceptance of the account balance or class of transactions is an error that affects

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

Expected misstatement is defined as

To obtain the known misstatements for the account balance or class of transactions,auditors

The population for a substantive test of balances consists of

Variables sampling is the application of an audit procedure to less than 100% of an account balance or class of transactions to determine whether the recorded amount is materially misstated.

The auditor must define the sampling unit in a way that is

What does it mean to say that an auditor uses statistical or nonstatistical sampling?

Haphazard sampling

The test objective for a substantive test is to determine

To obtain the projected misstatements for the account balance or class of transactions,auditors

Which of the following is a nonstatistical method of selecting a sample that the auditor may decide to use?

If we find misstatements in the sample

Sampling risk is

The desired level of assurance is defined as

If the auditor has a choice of sample size,he should consider which of the following factors in selecting the correct sample size?

Variables sampling is used to determine the accuracy of the recorded amount in the population from the evidence in a sample of the population.

Auditors control nonsampling risk by

Sampling would not be used to

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

The risk of incorrect acceptance of the account balance or class of transactions is an error that affects

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