The Most Common Statistical Sample Selection Method According to the Study

Question

Examlex · Accepted Answer

The Answer is Dollar-unit sampling is a statistical sample selection method that is commonly used in auditing and accounting. This method operates by selecting items for testing based on their dollar value, with the goal of identifying and testing items with higher monetary significance.

The process of dollar-unit sampling involves the following steps:
1. Determining the total dollar amount of the population being sampled.
2. Setting a sampling interval, which is calculated by dividing the total dollar amount by the desired sample size.
3. Randomly selecting a starting point within the population.
4. Selecting items for testing at regular intervals based on the sampling interval.

One of the main advantages of dollar-unit sampling is its ability to prioritize items with higher monetary value, which can be particularly useful in identifying and testing high-risk transactions or accounts. This can lead to a more efficient and effective audit process, as it focuses resources on items that are more likely to have a material impact on the financial statements.

However, there are also some disadvantages to using dollar-unit sampling. One potential drawback is that it may not be suitable for populations with a wide range of dollar values, as it could result in a skewed sample that does not accurately represent the entire population. Additionally, the method relies on the assumption that the dollar value of items is a reliable indicator of their risk, which may not always be the case.

In conclusion, while dollar-unit sampling can be a valuable tool for prioritizing high-value items in an audit, it is important to consider its limitations and potential biases when applying this method. It is also important to use professional judgment and consider other sampling methods in conjunction with dollar-unit sampling to ensure a comprehensive and accurate audit process.

The Most Common Statistical Sample Selection Method According to the Study

Essay

Correct Answer:
Answered by ExamLex AI

The Most Common Statistical Sample Selection Method According to the Study

Essay

Correct Answer:Answered by ExamLex AIShow Answer

Correct Answer:
Answered by ExamLex AI