Question 1

Which of the following statements is correct concerning statistical sampling in tests of controls?

Accepted Answer

A) The population size has little effect on determining sample size except for very small populations. 
B) The expected population deviation rate has little or no effect on determining sample size except for very small populations. 
C) As the population size doubles,the sample size also should double. 
D) For a given tolerable rate,a larger sample size should be selected as the expected population deviation rate decreases. 
A) The population size has little effect on determining sample size except for very small populations. 
B) The expected population deviation rate has little or no effect on determining sample size except for very small populations. 
C) As the population size doubles,the sample size also should double. 
D) For a given tolerable rate,a larger sample size should be selected as the expected population deviation rate decreases.

Question 2

Which of the following statements is correct concerning the use of nonstatistical sampling for substantive tests?

Accepted Answer

A) Its use is generally acceptable only for populations with an immaterial book value. 
B) It requires the use of structured sample size selection techniques to be acceptable. 
C) It may be especially useful in circumstances in which the combination of inherent and control risk is at the maximum level. 
D) Results will be projected to the population. 
A) Its use is generally acceptable only for populations with an immaterial book value. 
B) It requires the use of structured sample size selection techniques to be acceptable. 
C) It may be especially useful in circumstances in which the combination of inherent and control risk is at the maximum level. 
D) Results will be projected to the population.

Question 3

Which of the following statistical selection techniques is leastdesirable for use by an auditor?

Accepted Answer

A) Systematic selection. 
B) Stratified selection. 
C) Block selection. 
D) Sequential selection. 
A) Systematic selection. 
B) Stratified selection. 
C) Block selection. 
D) Sequential selection.

Question 4

While performing a substantive test of details during an audit,the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated.It was,in fact,not materially misstated.This situation illustrates the risk of:

Accepted Answer

A) Incorrect acceptance. 
B) Incorrect rejection. 
C) Assessing control risk too high. 
D) Assessing control risk too low. 
A) Incorrect acceptance. 
B) Incorrect rejection. 
C) Assessing control risk too high. 
D) Assessing control risk too low.

Question 5

The 3,000 accounts receivable of DEF Company have a total book value of $60,000.Bob Smith,CPA,has selected and audited a sample of 100 accounts with a total book value of $2,100.Using the difference estimation technique,Smith has properly estimated a projected misstatement of an overstatement of $6,000 for the entire population.The audited value of Smith's sample is:

Accepted Answer

A) $1,700 
B) $1,800 
C) $1,900 
D) $2,300 
A) $1,700 
B) $1,800 
C) $1,900 
D) $2,300

Question 6

In the past,the auditors have found that the book value of a receivable account has been related to the amount the account is misstated (i.e. ,large accounts have large misstatements and small accounts have small misstatements).Which of the following techniques is most likely to be efficient?

Accepted Answer

A) Mean-per-unit estimation. 
B) Ratio estimation. 
C) Difference estimation. 
D) Sequential sampling estimation. 
A) Mean-per-unit estimation. 
B) Ratio estimation. 
C) Difference estimation. 
D) Sequential sampling estimation.

Question 7

Using ratio and difference estimation for a sample is an example of a dual purpose test.

Accepted Answer

A) True 
 B)False

Question 8

To determine sample size in an attribute sampling application,what must be specified?

Accepted Answer

A) Population mean,expected error rate,allowance for sampling risk. 
B) Allowance for sampling risk,risk of assessing control risk too low,standard deviation. 
C) Allowance for sampling risk,risk of assessing control risk too low,expected deviation rate. 
D) Population mean,standard deviation,allowance for sampling risk. 
A) Population mean,expected error rate,allowance for sampling risk. 
B) Allowance for sampling risk,risk of assessing control risk too low,standard deviation. 
C) Allowance for sampling risk,risk of assessing control risk too low,expected deviation rate. 
D) Population mean,standard deviation,allowance for sampling risk.

Question 9

When performing tests of controls over authorization of cash receipts,which of the following sampling methods would be most appropriate?

Accepted Answer

A) Attributes. 
B) Ratio. 
C) Stratified. 
D) Variables. 
A) Attributes. 
B) Ratio. 
C) Stratified. 
D) Variables.

Question 10

Use of the ratio estimation sampling technique to estimate dollar amounts is inappropriate when:

Accepted Answer

A) The total book value is known and corresponds to the sum of all the individual book values. 
B) A book value for each sample item is unknown. 
C) There are some observed differences between audited values and book values. 
D) The audited values are nearly proportional to the book value. 
A) The total book value is known and corresponds to the sum of all the individual book values. 
B) A book value for each sample item is unknown. 
C) There are some observed differences between audited values and book values. 
D) The audited values are nearly proportional to the book value.

Question 11

Auditors project the misstatements found in the sample to the population when using statistical sampling,but not when using nonstatistical sampling.

Accepted Answer

A) True 
 B)False

Question 12

The 4,000 accounts receivable of Miller Company have a total book value of $150,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $3,700 and an audited value of $3,800.
-Using mean-per-unit estimation,an auditor has taken a sample of 150 from a population's 50,000 items;that population has a book value of $250,000.She found that in her sample the average audited value was $4.50,while the average book value was $5.20.What is the estimated total audited value of the population?

Accepted Answer

A) $215,000. 
B) $216,346. 
C) $225,000. 
D) $250,000. 
A) $215,000. 
B) $216,346. 
C) $225,000. 
D) $250,000.

Question 13

Various factors influence the sample size for a substantive test of details of an account balance.All other factors being equal,which of the following would lead to a larger sample size?

Accepted Answer

A) Lower assessment of control risk. 
B) Greater reliance on analytical procedures. 
C) Smaller expected frequency of misstatements. 
D) Smaller measure of tolerable misstatement. 
A) Lower assessment of control risk. 
B) Greater reliance on analytical procedures. 
C) Smaller expected frequency of misstatements. 
D) Smaller measure of tolerable misstatement.

Question 14

Increases in the number of deviations in an attributes sample results in a decrease in the achieved upper deviation rate of the attributes sample.

Accepted Answer

A) True 
 B)False

Question 15

Changing from a sampling plan using random selection without replacement to random selection with replacement has what effect on the required sample size?

Accepted Answer

A) Increases. 
B) Decreases. 
C) No effect. 
D) An indeterminate effect. 
A) Increases. 
B) Decreases. 
C) No effect. 
D) An indeterminate effect.

Question 16

Which of the following is a correct statement with respect to evaluating results when using nonstatistical sampling for substantive tests?

Accepted Answer

A) When the projected misstatement exceeds the tolerable misstatement,the auditor should conclude that the population is not misstated. 
B) The closer the projected misstatement is to the tolerable misstatement,the higher the risk of material misstatement. 
C) When the projected misstatement is equal to zero,the auditors may conclude with certainty that no misstatements exist in the account. 
D) When the projected misstatement percentage exceeds the risk of incorrect acceptance the auditors will generally conclude that the population is materially misstated. 
A) When the projected misstatement exceeds the tolerable misstatement,the auditor should conclude that the population is not misstated. 
B) The closer the projected misstatement is to the tolerable misstatement,the higher the risk of material misstatement. 
C) When the projected misstatement is equal to zero,the auditors may conclude with certainty that no misstatements exist in the account. 
D) When the projected misstatement percentage exceeds the risk of incorrect acceptance the auditors will generally conclude that the population is materially misstated.

Question 17

When the auditors have decided to use statistical rather than nonstatistical sampling,a disadvantage is that:

Accepted Answer

A) Designing efficient samples is more difficult. 
B) The costs of training staff may be higher. 
C) Sampling without replacement must be used. 
D) Objectively evaluating results is impossible. 
A) Designing efficient samples is more difficult. 
B) The costs of training staff may be higher. 
C) Sampling without replacement must be used. 
D) Objectively evaluating results is impossible.

Question 18

Which of the following is generally not true about statistical sampling as compared to nonstatistical sampling?

Accepted Answer

A) Statistical samples are more representative of the population. 
B) Statistical sample plans involve additional costs of evaluation. 
C) Statistical sampling allows a more objective evaluation of sample results. 
D) Statistical sampling may assist the auditors in designing more efficient samples. 
A) Statistical samples are more representative of the population. 
B) Statistical sample plans involve additional costs of evaluation. 
C) Statistical sampling allows a more objective evaluation of sample results. 
D) Statistical sampling may assist the auditors in designing more efficient samples.

Question 19

Which of the following is not generally used for selecting samples?

Accepted Answer

A) Random number tables. 
B) Random number generators. 
C) Physical representation numbers. 
D) Systematic selection. 
A) Random number tables. 
B) Random number generators. 
C) Physical representation numbers. 
D) Systematic selection.

Question 20

The definition of a "deviation" for a test of a control should include only those deviations that result in misstatements in the financial statements.

Accepted Answer

A) True 
 B)False

Which of the following statements is correct concerning statistical sampling in tests of controls?

Which of the following statements is correct concerning the use of nonstatistical sampling for substantive tests?

Which of the following statistical selection techniques is leastdesirable for use by an auditor?

While performing a substantive test of details during an audit,the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated.It was,in fact,not materially misstated.This situation illustrates the risk of:

In the past,the auditors have found that the book value of a receivable account has been related to the amount the account is misstated (i.e. ,large accounts have large misstatements and small accounts have small misstatements).Which of the following techniques is most likely to be efficient?

Using ratio and difference estimation for a sample is an example of a dual purpose test.

To determine sample size in an attribute sampling application,what must be specified?

When performing tests of controls over authorization of cash receipts,which of the following sampling methods would be most appropriate?

Use of the ratio estimation sampling technique to estimate dollar amounts is inappropriate when:

Auditors project the misstatements found in the sample to the population when using statistical sampling,but not when using nonstatistical sampling.

Various factors influence the sample size for a substantive test of details of an account balance.All other factors being equal,which of the following would lead to a larger sample size?

Increases in the number of deviations in an attributes sample results in a decrease in the achieved upper deviation rate of the attributes sample.

Changing from a sampling plan using random selection without replacement to random selection with replacement has what effect on the required sample size?

Which of the following is a correct statement with respect to evaluating results when using nonstatistical sampling for substantive tests?

When the auditors have decided to use statistical rather than nonstatistical sampling,a disadvantage is that:

Which of the following is generally not true about statistical sampling as compared to nonstatistical sampling?

Which of the following is not generally used for selecting samples?

The definition of a "deviation" for a test of a control should include only those deviations that result in misstatements in the financial statements.

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of Cpas

Audit Evidence and Documentation

Audit Planning, understanding the Client, assessing Risks, and Responding

Internal Control

Consideration of Internal Control in an Information Technology Environment

Cash and Financial Investments

Accounts Receivable, notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property,plant,and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Reports

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, operational, and Compliance Auditing

Filters

Exam 9: Audit Sampling

Which of the following statements is correct concerning statistical sampling in tests of controls?

Which of the following statements is correct concerning the use of nonstatistical sampling for substantive tests?

Which of the following statistical selection techniques is leastdesirable for use by an auditor?

While performing a substantive test of details during an audit,the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated.It was,in fact,not materially misstated.This situation illustrates the risk of:

In the past,the auditors have found that the book value of a receivable account has been related to the amount the account is misstated (i.e. ,large accounts have large misstatements and small accounts have small misstatements).Which of the following techniques is most likely to be efficient?

Using ratio and difference estimation for a sample is an example of a dual purpose test.

To determine sample size in an attribute sampling application,what must be specified?

When performing tests of controls over authorization of cash receipts,which of the following sampling methods would be most appropriate?

Use of the ratio estimation sampling technique to estimate dollar amounts is inappropriate when:

Auditors project the misstatements found in the sample to the population when using statistical sampling,but not when using nonstatistical sampling.

Various factors influence the sample size for a substantive test of details of an account balance.All other factors being equal,which of the following would lead to a larger sample size?

Increases in the number of deviations in an attributes sample results in a decrease in the achieved upper deviation rate of the attributes sample.

Changing from a sampling plan using random selection without replacement to random selection with replacement has what effect on the required sample size?

Which of the following is a correct statement with respect to evaluating results when using nonstatistical sampling for substantive tests?

When the auditors have decided to use statistical rather than nonstatistical sampling,a disadvantage is that:

Which of the following is generally not true about statistical sampling as compared to nonstatistical sampling?

Which of the following is not generally used for selecting samples?

The definition of a "deviation" for a test of a control should include only those deviations that result in misstatements in the financial statements.

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of Cpas

Audit Evidence and Documentation

Audit Planning, understanding the Client, assessing Risks, and Responding

Internal Control

Consideration of Internal Control in an Information Technology Environment

Cash and Financial Investments

Accounts Receivable, notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property,plant,and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Reports

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, operational, and Compliance Auditing

Filters