Question 1

Sampling risk for substantive testing includes the risk of incorrect acceptance of the account balance or class of transactions and the risk of incorrect rejection of the account balance or class of transactions.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following is a statistical audit sampling technique that the auditor may decide to use?

Accepted Answer

A)  judgmental sampling
B)  haphazard sampling
C)  monetary unit sampling
D)  classical variables sampling
E)  non random number samplingF) both A and CG) both B and EH) Both C and D H

Question 3

Tolerable misstatement is

Accepted Answer

A)  a matter of professional judgment
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)  often stated as 50-75% of materiality level
D)  the level of audit risk the auditor is willing to accept
E)  both A and CF) both B and EG) both C and D E

Question 4

You are responsible for planning the audit of fixed asset additions for the BCS Corporation.Describe how you would select a sample to determine whether fixed asset additions have been recorded correctly.Prepare a sampling plan to describe how you will perform the test.The desired level of assurance is 95% (5% risk of incorrect acceptance).The ratio of estimated misstatement to tolerable misstatement is 0.05.The confidence factor is 3.31 from the table in the chapter.Tolerable misstatement is $50,000,000.The balance in the fixed asset additions account is $480,000,000.

Accepted Answer

The answer of You are responsible for planning the audit...

Question 5

The auditor uses sampling for substantive tests of balances and for substantive tests of transactions to determine

Accepted Answer

A)  whether the financial statements accounts associated with the account balance or class of transactions are materially misstated
B)  whether the financial statements are materially misstated
C)  whether the balance sheet accounts associated with the account balance or class of transactions are materially misstated
D)  whether the income statement accounts associated with the account balance or class of transactions are materially misstated

Question 6

Sample size requirements are usually determined by statisticians in the head office of an accounting firm.

Accepted Answer

A) True 
 B)False

Question 7

With monetary unit sampling,a random start is

Accepted Answer

A)  a number selected from the random number tables
B)  a number selected judgmentally by the auditor
C)  a number between 1 and the sampling interval
D)  a number equal to the sampling interval

Question 8

We use evidence from the variables sample to arrive at a conclusion about the sample.

Accepted Answer

A) True 
 B)False

Question 9

To evaluate the statistical sample,the auditor uses

Accepted Answer

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

Question 10

Nonsampling risk includes

Accepted Answer

A)  all aspects of audit risk that are not related to sampling
B)  all aspects of audit risk that are related to sampling
C)  all aspects of control risk that are not related to sampling
D)  all aspects of control risk that are related to sampling

Question 11

Sampling methods for substantive samples include

Accepted Answer

A)  skip random sampling
B)  organized sampling
C)  simple random sampling
D)  systematic non random sampling
E)  haphazard samplingF) both A and BG) both C and EH) both D and E

Question 12

The population for a substantive test of transactions consists of

Accepted Answer

A)  all items in the class of transactions at the end of the 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 13

The items selected for examination are referred to as

Accepted Answer

A)  the population
B)  the variables
C)  the sample
D)  the misstatements

Question 14

Which of the following misstatements may cause the auditor to perform additional tests to determine if there are remaining misstatements in the account balance or class of transactions?

Accepted Answer

A)  misstatements caused by fraud
B)  misstatements caused by error
C)  misstatements caused by carelessness
D)  misstatements caused by lack of understanding of instructions
E)  misstatements caused by inattention to detailF) both A and DG) both B and CH) both D and E

Question 15

The auditor makes the decision about whether the misstatements found in a substantive test of balances sample are material after

Accepted Answer

A)  determining if the misstatements are within the tolerance level
B)  determining if the misstatements are within the assurance level
C)  extrapolating misstatements from the sample to the population
D)  projecting misstatements from the sample to the population

Question 16

Sampling would not be used to

Accepted Answer

A)  recalculate
B)  observe
C)  confirm
D)  make inquiries
E)  reperformF) both A and BG) both C and DH) Both B and D

Question 17

With monetary unit sampling,misstatements are

Accepted Answer

A)  evaluated to determine the extent of the misstatement
B)  evaluated to determine if the population can be accepted as fairly stated
C)  projected to the total population to determine possible misstatement
D)  projected to the population in each sampling interval where the misstatements were found

Question 18

With monetary unit sampling,estimating the misstatements in the population is

Accepted Answer

A)  best done by assuming the misstatements are relative to the dollar value of the population
B)  best done by determining the misstatements are relative to the dollar value of the population
C)  must be done by assuming the misstatements are relative to the dollar value of the population
D)  must be done by determining the misstatements are relative to the dollar value of the population

Question 19

With monetary unit sampling

Accepted Answer

A)  each individual interval in the population has an equal chance of being selected
B)  each individual dollar in the population has an equal chance of being selected
C)  each interval of dollars in the population has an equal chance of being selected
D)  each dollar within the interval in the population has an equal chance of being selected

Question 20

Sampling methods for substantive samples include

Accepted Answer

A)  skip random sampling
B)  organized sampling
C)  simple non random sampling
D)  systematic random sampling
E)  haphazard samplingF) both A and CG) both B and CH) Both D and E

Exam 9: Audit Sampling: Substantive Tests of Details

Sampling risk for substantive testing includes the risk of incorrect acceptance of the account balance or class of transactions and the risk of incorrect rejection of the account balance or class of transactions.

Which of the following is a statistical audit sampling technique that the auditor may decide to use?

Tolerable misstatement is

The auditor uses sampling for substantive tests of balances and for substantive tests of transactions to determine

Sample size requirements are usually determined by statisticians in the head office of an accounting firm.

With monetary unit sampling,a random start is

We use evidence from the variables sample to arrive at a conclusion about the sample.

To evaluate the statistical sample,the auditor uses

Nonsampling risk includes

Sampling methods for substantive samples include

The population for a substantive test of transactions consists of

The items selected for examination are referred to as

Which of the following misstatements may cause the auditor to perform additional tests to determine if there are remaining misstatements in the account balance or class of transactions?

The auditor makes the decision about whether the misstatements found in a substantive test of balances sample are material after

Sampling would not be used to

With monetary unit sampling,misstatements are

With monetary unit sampling,estimating the misstatements in the population is

With monetary unit sampling

Sampling methods for substantive samples include