An advantage of statistical sampling over non statistical sampling is that statistical sampling helps an auditor to
A. Minimize the failure to detect errors and fraud
B. Eliminate the risk of non-sampling errors
C. Reduce the level of audit risk and materiality to a relatively low amount
D. M...
MGMT 443 Quiz 4 Chapter 9 Exam
Questions with Latest Update
An advantage of statistical sampling over non statistical sampling is that statistical
sampling helps an auditor to
A. Minimize the failure to detect errors and fraud
B. Eliminate the risk of non-sampling errors
C. Reduce the level of audit risk and materiality to a relatively low amount
D. Measure the sufficiency of the evidence obtained - Answer-Answer: D
If the size of the sample to be used in a particular test of attributes has not been
determined by using statistical concepts, but the sample has been chosen in
accordance with random selection procedures,
A. No inferences can be drawn from the sample
B. The auditor has caused non-sampling risk to increase
C. The auditor may or may not achieve desired precision at the desired level of
confidence
D. The auditor will have to evaluate the results by reference to the principles of
discovery sampling - Answer-Answer: C
When planning a sample for substantive test of details, an auditor should consider
tolerable misstatement for the sample. This consideration should
A. Be related to the auditor's business risk
B. Not be adjusted for qualitative factors
C. Be related to preliminary judgments about materiality levels
D. Not be changed during the audit process - Answer-Answer: C
As lower acceptable levels of the risk of incorrect acceptance and performance
materiality are established, the auditor should plan more work on individual accounts to
A. Find smaller misstatements
B. Find larger misstatements
C. Increase the tolerable misstatement in the accounts
D. Decrease the risk of over reliance - Answer-Answer: A
While performing a 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
A. Incorrect rejection
, B. Incorrect acceptance
C. Overreliance
D. Underreliance - Answer-Answer: A
Which of the following sampling methods is used to estimate a numerical measurement
of a population, such as a dollar value?
A. Attribute sampling
B. Stop-or-go sampling
C. Variables sampling
D. Random-number sampling - Answer-Answer: C
In performing tests of control over authorization of cash disbursements, which of the
following statistical sampling methods would be most appropriate?
A. Variables
B. Stratified
C. Ratio
D. Attributes - Answer-Answer: D
The major reason that the difference and ratio estimation methods are expected to
produce audit efficiency is that the
A. Number of members of the populations of differences or ratios is smaller than the
number of members of the population of carrying amounts
B. The risk of incorrect acceptance may be completely ignored
C. Calculations required in using difference or ratio estimation are less arduous and
fewer than those required when using direct estimation
D. Variability of the populations of differences or ratios is less than that of the
populations of carrying amounts or audited values - Answer-Answer: D
Using statistical sampling to assist in verifying the year-end accounts payable balance,
an auditor has accumulated the following data:
Number of Accounts Book Balance Balance determined
By the Auditor
Population 4,100 $5,000,000 ?
Sample 200 $250,000 $300,000
Using the ratio estimation technique, the auditor's estimate of the year-end accounts
payable balance would be
A. $6,150,000
B. $6,000,000
C. $5,125,000
D. $5,050,000 - Answer-Answer: B
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