Question 1

Which of the following major stages of the audit is most closely related to variables sampling?

Accepted Answer

A)  Determining preliminary levels of performance materiality. 
B)  Performing tests of controls procedures. 
C)  Performing substantive procedures. 
D)  Searching for the possible occurrence of subsequent events. 
A)  Determining preliminary levels of performance materiality. 
B)  Performing tests of controls procedures. 
C)  Performing substantive procedures. 
D)  Searching for the possible occurrence of subsequent events.

Question 2

The process of subdividing a population into homogeneous subgroups is known as

Accepted Answer

A)  Classification. 
B)  Identification. 
C)  Sampling. 
D)  Stratification. 
A)  Classification. 
B)  Identification. 
C)  Sampling. 
D)  Stratification.

Question 3

Which of the following courses of action would an audit team most likely follow in planning a sample of cash disbursements if the audit team is aware of several unusually large cash disbursements?

Accepted Answer

A)  Increase the sample size to reduce the effect of the unusually large disbursements. 
B)  Continue to draw new samples until all unusually large disbursements appear in the sample. 
C)  Set the tolerable rate of deviation at a lower level than originally planned. 
D)  Stratify the cash disbursements population so that the unusually large disbursements are selected. 
A)  Increase the sample size to reduce the effect of the unusually large disbursements. 
B)  Continue to draw new samples until all unusually large disbursements appear in the sample. 
C)  Set the tolerable rate of deviation at a lower level than originally planned. 
D)  Stratify the cash disbursements population so that the unusually large disbursements are selected.

Question 4

The risk of incorrect rejection results in a(n)___________________ loss to the auditor.

Accepted Answer

The answer of The risk of incorrect rejection results in...

Question 5

The tainting percentage is determined by dividing the recorded amount of the sample item by the sampling interval.

Accepted Answer

A) True 
 B)False

Question 6

Assume that an account with a recorded balance of $5,000 has an audited balance of $3,000.Using MUS,if the sampling interval is $1,500,the projected misstatement would be

Accepted Answer

A)  $600. 
B)  $900. 
C)  $2,000. 
D)  $3,000. 
A)  $600. 
B)  $900. 
C)  $2,000. 
D)  $3,000.

Question 7

Bama's accounts receivable were recorded at $600,000.Assume that the auditor determined a sample size of 20 customer accounts and prepared confirmations to those customers.One misstatement was determined; an account recorded at $10,000 was confirmed to have a balance of $5,000. What is the appropriate sampling interval?

Accepted Answer

A)  $60. 
B)  $250. 
C)  $500. 
D)  $30,000. 
A)  $60. 
B)  $250. 
C)  $500. 
D)  $30,000.

Question 8

Which of the following is not true with respect to the risk of incorrect acceptance?

Accepted Answer

A)  This risk provides the auditor an efficiency loss. 
B)  This risk results in the auditor's making an incorrect conclusion about the client's account balance or class of transactions. 
C)  This risk occurs when the sample results suggest that the account balance is fairly stated. 
D)  This risk is controlled by the auditor in determining sample size under monetary unit sampling (MUS). 
A)  This risk provides the auditor an efficiency loss. 
B)  This risk results in the auditor's making an incorrect conclusion about the client's account balance or class of transactions. 
C)  This risk occurs when the sample results suggest that the account balance is fairly stated. 
D)  This risk is controlled by the auditor in determining sample size under monetary unit sampling (MUS).

Question 9

If the _______________________ is less than the ______________________,the audit team would conclude that the account balance is fairly stated.

Accepted Answer

A)  Projected misstatement; tolerable misstatement. 
B)  Tolerable misstatement; projected misstatement. 
C)  Upper limit on misstatements; tolerable misstatement. 
D)  Tolerable misstatement; upper limit on misstatements. 
A)  Projected misstatement; tolerable misstatement. 
B)  Tolerable misstatement; projected misstatement. 
C)  Upper limit on misstatements; tolerable misstatement. 
D)  Tolerable misstatement; upper limit on misstatements.

Question 10

Bama's accounts receivable were recorded at $600,000.Assume that the auditor determined a sample size of 20 customer accounts and prepared confirmations to those customers.One misstatement was determined; an account recorded at $10,000 was confirmed to have a balance of $5,000. What is the projected misstatement?

Accepted Answer

A)  $5,000. 
B)  $10,000. 
C)  $15,000. 
D)  $30,000. 
A)  $5,000. 
B)  $10,000. 
C)  $15,000. 
D)  $30,000.

Question 11

Which of the following factors that affect sample size can be determined by considering the recorded account balance of the account or class of transactions as well as the relationship between the recorded account balance or class of transactions with important financial statement subtotals?

Accepted Answer

A)  Expected error. 
B)  Population size. 
C)  Risk of incorrect acceptance. 
D)  Tolerable misstatement. 
A)  Expected error. 
B)  Population size. 
C)  Risk of incorrect acceptance. 
D)  Tolerable misstatement.

Question 12

A number of factors influence the sample size for a variables sampling application.All other factors held constant,which of the following would lead to a larger sample size?

Accepted Answer

A)  A lower assessed level of risk of material misstatement. 
B)  Increased use of analytical procedures to obtain evidence about particular assertions. 
C)  Lower frequency and magnitude of misstatements. 
D)  Lower levels of tolerable misstatement. 
A)  A lower assessed level of risk of material misstatement. 
B)  Increased use of analytical procedures to obtain evidence about particular assertions. 
C)  Lower frequency and magnitude of misstatements. 
D)  Lower levels of tolerable misstatement.

Question 13

Which of the following statements is not correct if the actual misstatement is $1,000,the upper limit on misstatement is $10,000,and the tolerable misstatement is $12,000?

Accepted Answer

A)  There is a (1 minus the risk of incorrect acceptance) probability that the true misstatement in the account balance exceeds $10,000. 
B)  The allowance for sampling risk is $9,000. 
C)  There is a (1 minus the risk of incorrect acceptance) probability that the true misstatement in the account balance is less than $10,000. 
D)  The account balance appears to be fairly recorded. 
A)  There is a (1 minus the risk of incorrect acceptance) probability that the true misstatement in the account balance exceeds $10,000. 
B)  The allowance for sampling risk is $9,000. 
C)  There is a (1 minus the risk of incorrect acceptance) probability that the true misstatement in the account balance is less than $10,000. 
D)  The account balance appears to be fairly recorded.

Question 14

In a classical variables sampling application,if the _____________________ exceeds the maximum difference between the recorded balance and any point within the precision interval,the auditor would decide to _____________________ the account balance as fairly stated.

Accepted Answer

A)  sample estimate, accept. 
B)  sample estimate, reject. 
C)  tolerable misstatement, accept. 
D)  tolerable misstatement, reject. 
A)  sample estimate, accept. 
B)  sample estimate, reject. 
C)  tolerable misstatement, accept. 
D)  tolerable misstatement, reject.

Question 15

The basic allowance for sampling risk is determined by multiplying the __________________________ by the reliability factor for the acceptable risk of incorrect acceptance.

Accepted Answer

The answer of The basic allowance for sampling risk is...

Question 16

Alice Rathermel audited LoHo Company's inventory using sampling.She examined 120 items from an inventory compilation list and discovered net overstatement of $480.The audited items had a book (recorded)value of $48,000.There were 1,200 inventory items listed,and the total recorded inventory amount was $490,000.What is the projected misstatement using mean-per-unit estimation?

Accepted Answer

A)  $480. 
B)  $576,000. 
C)  $10,000. 
D)  $480,000. 
A)  $480. 
B)  $576,000. 
C)  $10,000. 
D)  $480,000.

Which of the following major stages of the audit is most closely related to variables sampling?

The process of subdividing a population into homogeneous subgroups is known as

Which of the following courses of action would an audit team most likely follow in planning a sample of cash disbursements if the audit team is aware of several unusually large cash disbursements?

The risk of incorrect rejection results in a(n)___________________ loss to the auditor.

The tainting percentage is determined by dividing the recorded amount of the sample item by the sampling interval.

Assume that an account with a recorded balance of $5,000 has an audited balance of $3,000.Using MUS,if the sampling interval is $1,500,the projected misstatement would be

Which of the following is not true with respect to the risk of incorrect acceptance?

If the _ is less than the ,the audit team would conclude that the account balance is fairly stated.

Which of the following factors that affect sample size can be determined by considering the recorded account balance of the account or class of transactions as well as the relationship between the recorded account balance or class of transactions with important financial statement subtotals?

A number of factors influence the sample size for a variables sampling application.All other factors held constant,which of the following would lead to a larger sample size?

Which of the following statements is not correct if the actual misstatement is $1,000,the upper limit on misstatement is $10,000,and the tolerable misstatement is $12,000?

In a classical variables sampling application,if the _ exceeds the maximum difference between the recorded balance and any point within the precision interval,the auditor would decide to _ the account balance as fairly stated.

The basic allowance for sampling risk is determined by multiplying the __________________________ by the reliability factor for the acceptable risk of incorrect acceptance.

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Auditing in a Computerized Environment

Filters

Exam 19: Variables Sampling

Which of the following major stages of the audit is most closely related to variables sampling?

The process of subdividing a population into homogeneous subgroups is known as

Which of the following courses of action would an audit team most likely follow in planning a sample of cash disbursements if the audit team is aware of several unusually large cash disbursements?

The risk of incorrect rejection results in a(n)___________________ loss to the auditor.

The tainting percentage is determined by dividing the recorded amount of the sample item by the sampling interval.

Assume that an account with a recorded balance of $5,000 has an audited balance of $3,000.Using MUS,if the sampling interval is $1,500,the projected misstatement would be

Which of the following is not true with respect to the risk of incorrect acceptance?

If the _______________________ is less than the ______________________,the audit team would conclude that the account balance is fairly stated.

Which of the following factors that affect sample size can be determined by considering the recorded account balance of the account or class of transactions as well as the relationship between the recorded account balance or class of transactions with important financial statement subtotals?

A number of factors influence the sample size for a variables sampling application.All other factors held constant,which of the following would lead to a larger sample size?

Which of the following statements is not correct if the actual misstatement is $1,000,the upper limit on misstatement is $10,000,and the tolerable misstatement is $12,000?

In a classical variables sampling application,if the _____________________ exceeds the maximum difference between the recorded balance and any point within the precision interval,the auditor would decide to _____________________ the account balance as fairly stated.

The basic allowance for sampling risk is determined by multiplying the __________________________ by the reliability factor for the acceptable risk of incorrect acceptance.

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Auditing in a Computerized Environment

Filters

If the _ is less than the ,the audit team would conclude that the account balance is fairly stated.

In a classical variables sampling application,if the _ exceeds the maximum difference between the recorded balance and any point within the precision interval,the auditor would decide to _ the account balance as fairly stated.