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Attribute sampling is used to estimate the proportion of a population that possesses a specified characteristic.

A) True
B) False

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An auditor who uses statistical sampling for attributes in testing internal controls is most likely to reduce the planned reliance on a prescribed control when the


A) sample deviation rate plus the allowance for sampling risk equals the tolerable deviation rate.
B) sample deviation rate is less than the expected population deviation rate used in planning the sample.
C) tolerable deviation rate less the allowance for sampling risk exceeds the sample deviation rate.
D) sample deviation rate plus the allowance for sampling risk exceeds the tolerable deviation rate.

E) A) and B)
F) None of the above

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Which of the following risks is related to efficiency of testing?


A) The risk of incorrect rejection.
B) Inherent risk.
C) The risk of incorrect acceptance.
D) None of these.

E) A) and B)
F) None of the above

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Define Type I and Type II errors.

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A Type I error is equivalent to incorrec...

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Which of the following statements is correct concerning statistical sampling in compliance testing?


A) The population size has little or no 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 deviation rate, a larger sample size should be selected as the expected population deviation rate decreases.

E) B) and C)
F) None of the above

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Why must an auditor use sampling? What tradeoffs occur when an auditor uses sampling?

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An auditor must use sampling because to ...

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If the expected deviation rate exceeds the tolerable deviation rate,the auditor is most likely to


A) have a large sample size.
B) set control risk at the maximum without sampling.
C) set control risk at the minimum without sampling.
D) pick a lower risk of assessing control risk too low to increase sample size.

E) A) and D)
F) C) and D)

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Audit sampling is commonly used to gather scanning audit evidence.

A) True
B) False

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The term precision relates to


A) the difference between confidence level and estimated error.
B) the difference between confidence level and tolerable error.
C) the difference between expected and tolerable deviation rate.
D) the difference between expected and sample deviation rate.

E) None of the above
F) A) and C)

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Which of the following best describes the distinguishing feature of statistical sampling?


A) It requires the examination of a smaller number of supporting documents.
B) It provides a means for measuring mathematically the degree of uncertainty that results from examining only part of a population.
C) It reduces the problems associated with the auditor's judgment concerning materiality.
D) It is evaluated in terms of two parameters: statistical mean and random selection.

E) B) and C)
F) A) and D)

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Audit sampling is commonly used to gather confirmation audit evidence.

A) True
B) False

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Identify the types of audit evidence that are tested using audit sampling techniques.

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Some audit procedures involve sampling,w...

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Auditors who prefer statistical to nonstatistical sampling believe that the principal advantage of statistical sampling flows from its unique ability to


A) define the precision required to provide audit satisfaction.
B) mathematically measure uncertainty.
C) establish conclusive audit evidence with decreased audit effort.
D) promote a more legally defensible procedural approach.

E) All of the above
F) B) and D)

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Audit sampling is not used for which type of audit evidence?


A) Inquiry.
B) Inspection of tangible assets.
C) Reperformance.
D) Confirmation.

E) A) and B)
F) A) and C)

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A Type I error is the risk of incorrect acceptance.

A) True
B) False

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In attributes sampling,a 10% change in which of the following factors normally will have the least effect on the size of a statistical sample?


A) Population size.
B) Tolerable deviation rate.
C) Expected population deviation rate.
D) Standard deviation.

E) B) and D)
F) B) and C)

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A Type II error is the risk of incorrect acceptance.

A) True
B) False

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For which of the following audit tests would an auditor most likely use attributes sampling?


A) Making an independent estimate of the amount of LIFO inventory.
B) Examining invoices in support of the valuation of fixed asset additions.
C) Selecting accounts receivable balances for confirmation.
D) Inspecting employee time cards for proper approval by supervisors.

E) B) and D)
F) B) and C)

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The likelihood of assessing control risk too high is the risk that the sample selected to test controls


A) does not support the auditor's planned assessed level of control risk when the true operating effectiveness of internal control justifies such an assessment.
B) contains misstatements that could be material to the financial statements when aggregated with misstatements in other account balances or transactions classes.
C) contains proportionately fewer deviations from prescribed internal controls than exist in the balance or class as a whole.
D) does not support the tolerable misstatement for some or all of management's assertions.

E) B) and C)
F) A) and D)

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An auditor is testing internal control procedures that are evidenced on an entity's vouchers.To select the vouchers for testing,the auditor obtains random numbers between the first and last voucher number in the period.If a random number matches the number of avoided voucher,that voucher ordinarily should be replaced by another voucher in the random sample if the voucher


A) constitutes a deviation.
B) has been properly voided.
C) cannot be located.
D) represents an immaterial dollar amount.

E) None of the above
F) B) and C)

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