Multiple Choice 1 Which of the following sampling methods would be used to estimate a numeric measurement of a population, such as a dollar value? 2. A number of 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? 3 Which of the following sample planning factors would influence the sample size for a substantive test of details for a specific account? 4 The risk of incorrect acceptance
relates to the 5 Which of the following statements concerning monetary- unit sampling is correct? 6 How would increases in tolerable misstatement and assessed level of control risk affect the sample size in a substantive test of details? 7 An auditor is performing substantive procedures of pricing and extensions of perpetual inventory balances consisting of a large number of items. Past
experience indicates that there may be numerous pricing and extension errors. Which of the following statistical sampling approaches is most appropriate? 8 Which of the following statements concerning the auditor’s use of statistical sampling is correct? 9. In classical variables sampling, which of the following must be known in
order to estimate the appropriate sample size required to meet the auditor’s needs in a given situation? 10. Which of the following would most likely be an advantage in using classical variables sampling rather than monetary- unit sampling?
a. Random sampling.
b. Numeric sampling.
c. Attribute sampling.
d. Variable sampling.
a. Greater reliance on internal controls.
b. Greater reliance on analytical procedures.
c. Smaller expected frequency of misstatements.
d. Smaller amount of tolerable misstatement.
a. Effectiveness of the audit.
b. Efficiency of the audit.
c. Planning materiality.
d. Allowable risk of tolerable misstatement.
a. The sampling distribution should approximate the normal distribution.
b. Overstated units have a lower probability of sample selection than units that are understated.
c. The auditor controls the risk of incorrect acceptance by
specifying the desired confidence level for the sampling plan.
d. The sampling interval is calculated by dividing the number of physical units in the population by the sample size.
a. Classical variables sampling.
b. Monetary- unit sampling.
c. Stop- n- go sampling.
d. Attribute sampling.
a. An auditor needs to estimate the dollar amount of the standard deviation of the population in order to
use classical variables sampling.
b. An assumption of monetary- unit sampling is that the underlying accounting population is normally distributed.
c. A classical variables sample needs to be designed with special considerations to include negative balances in the sample.
d. The selection of zero balances usually does not require special sample design considerations when using monetary- unit sampling.
a. The qualitative aspects of misstatements.
b. The total dollar amount of the population.
c. The acceptable level of risk.
d. The estimated percentage of deviations in the population.
a. An estimate of the standard deviation of
the population’s recorded amounts is not required.
b. The auditor rarely needs the assistance of a computer program to design an efficient sample.
c. Inclusion of zero and negative balances generally does not require special design considerations.
d. Any amount that is individually significant is automatically identified andselected.
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2. Which of the following sampling methods is used to estimate a numerical measurement of apopulation, such as a dollar value?a. Attribute sampling.c. Variables sampling.b. Stop-or-go sampling.d. Random-number sampling.3. In applying variables sampling, an auditor attempts toa. Estimate a qualitative characteristic of interest.b. Determine various rates of occurrence for specified attributes.c. Discover at least one instance of a critical deviation.d. Predict a monetary population value within a range of precision.4. Several risks are inherent in the evaluation of audit evidence that has been obtained throughthe use of statistical sampling. An example of a beta or Type II error related to sampling risk isthe failure toa. Properly define the population to be sampled.b. Draw a random sample from the population.c. Reject the statistical hypothesis that a book value is not materially misstated when the truebook value is materially misstated.d. Accept the statistical hypothesis that the book value is not materially misstated when thetrue book value is not materially misstated.5. As lower acceptable levels of both audit risk and materiality are established, the auditorshould plan more work on individual accounts toa.Find smaller misstatements. c. Increase the tolerable misstatement in the accounts.b. Find larger misstatements. d. Decrease the risk of assessing control risk too low.6. In performing substantive tests, the auditor is concerned with two risks or errors of sampling:1. The risk of incorrect rejection (an alpha or Type I error)2. The risk of incorrect acceptance (a beta or Type II error)Which of the following is true about alpha and beta errors?a. The alpha error is of greater concern to the auditor than the beta error.b. The beta error is of greater concern to the auditor than the alpha error.c. The beta error and the alpha error are of equal importance to the auditor.d. Neither the alpha error nor the beta error need be considered by the auditor.7. While performing a substantive test of details during an audit, the auditor determined that thesample results supported the conclusion that the recorded account balance was materiallymisstated. It was, in fact, not materially misstated. This situation illustrates the risk ofa. Assessing control risk too low.c. Incorrect rejection.b. Assessing control risk too high.d. Incorrect acceptance.
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