Question 1

In assessing sampling risk,the risk of incorrect rejection and the risk of assessing control risk too high relate to the:

Accepted Answer

A) Efficiency of the audit. 
B) Effectiveness of the audit. 
C) Selection of the sample. 
D) Audit quality controls. 
A) Efficiency of the audit. 
B) Effectiveness of the audit. 
C) Selection of the sample. 
D) Audit quality controls. A

Question 2

Which of the following factors does an auditor need to consider in planning a particular audit sample for a test of control?

Accepted Answer

A) Number of items in the population. 
B) Total dollar amount of the items to be sampled. 
C) Acceptable level of risk of assessing control risk too low. 
D) Tolerable misstatement. 
A) Number of items in the population. 
B) Total dollar amount of the items to be sampled. 
C) Acceptable level of risk of assessing control risk too low. 
D) Tolerable misstatement. C

Question 3

The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the ratio estimation technique,the estimated total audited value of the population is:

Accepted Answer

A) $100,000. 
B) $120,000. 
C) $140,000. 
D) $144,000 
A) $100,000. 
B) $120,000. 
C) $140,000. 
D) $144,000 D

Question 4

The auditors expect a population deviation rate of billing errors of eight percent,and have established a tolerable rate of five percent.The sampling approach most likely to be used is:

Accepted Answer

A) Attributes sampling. 
B) Stratified random sampling. 
C) Variables sampling. 
D) None, as sampling does not seem appropriate in this situation. 
A) Attributes sampling. 
B) Stratified random sampling. 
C) Variables sampling. 
D) None, as sampling does not seem appropriate in this situation.

Question 5

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 6

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 7

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 8

The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the difference estimation technique,estimated total audited value of the population is:

Accepted Answer

A) $100,000. 
B) $120,000. 
C) $140,000. 
D) $144,000 
A) $100,000. 
B) $120,000. 
C) $140,000. 
D) $144,000

Question 9

In testing accounts receivable,an auditor sends out positive confirmation requests to 100 randomly selected customers.A customer returns the confirmation indicating that the balance is correct when,in fact,the balance is overstated.This is an example of:

Accepted Answer

A) Projected misstatement. 
B) Sampling error. 
C) Standard error. 
D) Nonsampling error. 
A) Projected misstatement. 
B) Sampling error. 
C) Standard error. 
D) Nonsampling error.

Question 10

If all other factors specified in an attributes sampling plan remain constant,decreasing the tolerable rate and decreasing the risk of assessing control risk too low would have what effect on sample size?

Accepted Answer

A) Increase. 
B) Remain the same. 
C) Decrease. 
D) Indeterminate, depends upon exact change being made. 
A) Increase. 
B) Remain the same. 
C) Decrease. 
D) Indeterminate, depends upon exact change being made.

Question 11

The auditors' failure to recognize a misstatement in an amount or a deviation in an internal control data processing procedure is described as a:

Accepted Answer

A) Statistical error. 
B) Sampling misstatement. 
C) Standard error of the mean. 
D) Nonsampling error. 
A) Statistical error. 
B) Sampling misstatement. 
C) Standard error of the mean. 
D) Nonsampling error.

Question 12

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 13

Which of the following statistical sampling techniques involves taking samples in a series of stages?

Accepted Answer

A) Systematic sampling. 
B) Sequential sampling. 
C) Continuous sampling. 
D) Multiple location sampling. 
A) Systematic sampling. 
B) Sequential sampling. 
C) Continuous sampling. 
D) Multiple location sampling.

Question 14

Statistical sampling generally may be applied to test internal control when the client's internal control procedures:

Accepted Answer

A) Depend primarily on appropriate segregation of duties. 
B) Are carefully reduced to writing and are included in client accounting manuals. 
C) Leave an audit trail in the form of evidence of compliance. 
D) Enable the detection of material fraud in the accounting records. 
A) Depend primarily on appropriate segregation of duties. 
B) Are carefully reduced to writing and are included in client accounting manuals. 
C) Leave an audit trail in the form of evidence of compliance. 
D) Enable the detection of material fraud in the accounting records.

Question 15

An auditor plans to examine a sample of 20 checks for counter signatures as prescribed by the client's control procedures.One of the checks in the chosen sample of 20 cannot be found.The auditor should consider the reasons for this limitation and:

Accepted Answer

A) Evaluate the results as if the sample size had been 19. 
B) Treat the missing check as a deviation for the purpose of evaluating the sample. 
C) Treat the missing check in the same manner as the majority of the other 19 checks, i.e., countersigned or not. 
D) Choose another check to replace the missing check in the sample. 
A) Evaluate the results as if the sample size had been 19. 
B) Treat the missing check as a deviation for the purpose of evaluating the sample. 
C) Treat the missing check in the same manner as the majority of the other 19 checks, i.e., countersigned or not. 
D) Choose another check to replace the missing check in the sample.

Question 16

Using mean-per-unit estimation,an auditor has taken a sample of 200 from a population's 40,000 items; that population has a book value of $200,000.She found that in her sample the average audited value was $4.20,while the average book value was $5.20.What is the estimated total audited value of the population?

Accepted Answer

A) $160,000. 
B) $161,538. 
C) $168,000. 
D) $200,000. 
A) $160,000. 
B) $161,538. 
C) $168,000. 
D) $200,000.

Question 17

The 2000 accounts receivable of ABC Company have a total book value of $40,000.Bob Rotter,CPA,has selected and audited a sample of 100 accounts with a total book value of $1,950.The audited value of the 100 accounts in the sample is $1,875. Using the ratio estimation technique,Rotter's estimate (to the nearest dollar)of year-end accounts receivable balance would be:

Accepted Answer

A) $37,500 
B) $38,462 
C) $38,500 
D) $41,600 
A) $37,500 
B) $38,462 
C) $38,500 
D) $41,600

Question 18

An auditor wishes to estimate inventory shrinkage by weighing a sample of inventory items.From experience,the auditor knows that a few specific items are subject to unusually large amounts of shrinkage.In using statistical sampling,the auditor's best course of action is to:

Accepted Answer

A) Eliminate any of the items known to be subject to unusually large amounts of shrinkage. 
B) Increase the sample size to lessen the effect of the items subject to unusually large amounts of shrinkage. 
C) Stratify the inventory population so that items subject to unusually large amounts of shrinkage are reviewed separately. 
D) Continue to draw new samples until a sample is drawn which includes none of the items known to be subject to large amounts of shrinkage. 
A) Eliminate any of the items known to be subject to unusually large amounts of shrinkage. 
B) Increase the sample size to lessen the effect of the items subject to unusually large amounts of shrinkage. 
C) Stratify the inventory population so that items subject to unusually large amounts of shrinkage are reviewed separately. 
D) Continue to draw new samples until a sample is drawn which includes none of the items known to be subject to large amounts of shrinkage.

Question 19

The auditors expect a population deviation rate of billing errors of two percent,and have established a tolerable rate of five percent.The sampling approach most likely to be used is:

Accepted Answer

A) Attributes sampling. 
B) Stratified sequential sampling. 
C) Discovery sampling. 
D) None, as sampling does not seem appropriate in this situation. 
A) Attributes sampling. 
B) Stratified sequential sampling. 
C) Discovery sampling. 
D) None, as sampling does not seem appropriate in this situation.

Question 20

The 3000 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

In assessing sampling risk,the risk of incorrect rejection and the risk of assessing control risk too high relate to the:

Which of the following factors does an auditor need to consider in planning a particular audit sample for a test of control?

The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the ratio estimation technique,the estimated total audited value of the population is:

The auditors expect a population deviation rate of billing errors of eight percent,and have established a tolerable rate of five percent.The sampling approach most likely to be used is:

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?

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

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

The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the difference estimation technique,estimated total audited value of the population is:

In testing accounts receivable,an auditor sends out positive confirmation requests to 100 randomly selected customers.A customer returns the confirmation indicating that the balance is correct when,in fact,the balance is overstated.This is an example of:

If all other factors specified in an attributes sampling plan remain constant,decreasing the tolerable rate and decreasing the risk of assessing control risk too low would have what effect on sample size?

The auditors' failure to recognize a misstatement in an amount or a deviation in an internal control data processing procedure is described as a:

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:

Which of the following statistical sampling techniques involves taking samples in a series of stages?

Statistical sampling generally may be applied to test internal control when the client's internal control procedures:

An auditor plans to examine a sample of 20 checks for counter signatures as prescribed by the client's control procedures.One of the checks in the chosen sample of 20 cannot be found.The auditor should consider the reasons for this limitation and:

An auditor wishes to estimate inventory shrinkage by weighing a sample of inventory items.From experience,the auditor knows that a few specific items are subject to unusually large amounts of shrinkage.In using statistical sampling,the auditor's best course of action is to:

The auditors expect a population deviation rate of billing errors of two percent,and have established a tolerable rate of five percent.The sampling approach most likely to be used is:

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 Report

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Probability-Proportion-To-Size Sampling

Filters

Exam 9: Audit Sampling

In assessing sampling risk,the risk of incorrect rejection and the risk of assessing control risk too high relate to the:

Which of the following factors does an auditor need to consider in planning a particular audit sample for a test of control?

The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the ratio estimation technique,the estimated total audited value of the population is:

The auditors expect a population deviation rate of billing errors of eight percent,and have established a tolerable rate of five percent.The sampling approach most likely to be used is:

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?

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

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

The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the difference estimation technique,estimated total audited value of the population is:

In testing accounts receivable,an auditor sends out positive confirmation requests to 100 randomly selected customers.A customer returns the confirmation indicating that the balance is correct when,in fact,the balance is overstated.This is an example of:

If all other factors specified in an attributes sampling plan remain constant,decreasing the tolerable rate and decreasing the risk of assessing control risk too low would have what effect on sample size?

The auditors' failure to recognize a misstatement in an amount or a deviation in an internal control data processing procedure is described as a:

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:

Which of the following statistical sampling techniques involves taking samples in a series of stages?

Statistical sampling generally may be applied to test internal control when the client's internal control procedures:

An auditor plans to examine a sample of 20 checks for counter signatures as prescribed by the client's control procedures.One of the checks in the chosen sample of 20 cannot be found.The auditor should consider the reasons for this limitation and:

An auditor wishes to estimate inventory shrinkage by weighing a sample of inventory items.From experience,the auditor knows that a few specific items are subject to unusually large amounts of shrinkage.In using statistical sampling,the auditor's best course of action is to:

The auditors expect a population deviation rate of billing errors of two percent,and have established a tolerable rate of five percent.The sampling approach most likely to be used is:

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 Report

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Probability-Proportion-To-Size Sampling

Filters