Question 1

Which of the following statements about audit sampling risks is correct?

Accepted Answer

A)   Nonsampling risk arises from the possibility that, when a substantive test is related to a sample of items, conclusions might be different than if the auditor had tested each item in the population.
B)   Nonsampling risk can arise because an auditor failed to recognize misstatements.
C)   Sampling risk is derived from the uncertainty in applying audit procedures to specific risks.
D)   Sampling risk includes the possibility of selecting audit procedures that are not appropriate to achieve the specific objective.E) A) and B)
F) C) and D)

Question 2

In which of the following types of sampling applications is the auditor exposed to sampling risk?

Accepted Answer

A)   Statistical sampling: Yes; Nonstatistical sampling: Yes
B)   Statistical sampling: Yes; Nonstatistical sampling: No
C)   Statistical sampling: No; Nonstatistical sampling: Yes
D)   Statistical sampling: No; Nonstatistical sampling: NoE) A) and B)
F) B) and C)

Question 3

Which of the following does not have a direct relationship with sample size?

Accepted Answer

A)   Expected population deviation rate
B)   Population size
C)   Risk of assessing control risk too low
D)   All of the above have a direct relationship with sample sizeE) None of the above
F) C) and D) C

Question 4

Which of the following is the least likely outcome when the upper limit on misstatement exceeds the tolerable misstatement?

Accepted Answer

A)   The auditor would be exposed to the risk of incorrect rejection.
B)   The auditor would be exposed to an efficiency loss.
C)   The auditor would consider expanding the sample to evaluate additional transactions or components of the account balance.
D)   The auditor would conclude that the account balance is fairly stated.E) C) and D)
F) None of the above

Question 5

Which of the following most closely represents an unrestricted random selection procedure?

Accepted Answer

A)   Identifying a starting point within the population and bypassing a fixed number of items
B)   Matching items in the population to a series of randomly-selected numbers
C)   Randomly selecting invoices to customers whose last names start with "W"
D)   Randomly picking items from an accounts receivable fileE) A) and B)
F) All of the above

Question 6

Which of the following situations is true with respect to sampling?

Accepted Answer

A)   Sampling results in a tradeoff of efficiency for greater effectiveness.
B)   Sampling is most useful when the need for exact information is very important.
C)   A well-designed sample can appropriately limit the exposure to nonsampling risk.
D)   Sampling is more appropriate when the number of items comprising the population is relatively large.E) B) and C)
F) A) and C)

Question 7

Which of the following appropriately describes the effect of sample size on sampling risk?

Accepted Answer

A)   Selecting a smaller sample decreases sampling risk.
B)   Selecting a larger sample increases sampling risk.
C)   Selecting a smaller sample increases sampling risk.
D)   The size of a sample is unrelated to sampling risk.E) None of the above
F) B) and D)

Question 8

Which of the following is the most likely outcome when the upper limit rate of deviation is less than the tolerable rate of deviation?

Accepted Answer

A)   The auditor would be exposed to the risk of assessing control risk too low.
B)   The auditor would decide to reduce the planned degree of reliance on internal control.
C)   The auditor would increase the extent of further audit procedures.
D)   The auditor would be exposed to a potential efficiency loss.E) A) and B)
F) C) and D)

Question 9

In each of the following situations,indicate whether attribute (A)or variables (V)sampling is used.
___ 1.Observe a sample of employees at various cash registers to ensure they log in to the system before they can begin processing transactions,and subsequently log out when their shift is over to prevent unauthorized access to the cash registers.
___ 2.Select a sample of purchase orders and ensure they are from vendors on the approved vendor list.
___ 3.Select a sample of unpaid vendor invoices and determine a projected balance for accounts payable.
___ 4.Select a sample of perishable items from inventory to see if they have exceeded their expiration date.
___ 5.Select a sample of accounts receivable transactions to determine the accuracy of the current period's bad debt expense.
___ 6.Send confirmations of the account balance for debt obligations greater than the materiality threshold.

Accepted Answer

1.A; 2.A; ...

Question 10

An auditor is reviewing a sample of cash disbursements to ensure that the appropriate supporting documents were received prior to payment.Which type of sampling approach would the auditor use to perform this test?

Accepted Answer

A)   Collective sampling
B)   Attributes sampling
C)   Variables sampling
D)   Quality samplingE) B) and C)
F) A) and D)

Question 11

An auditor discovers that an account balance believed not to be materially misstated based on an audit sample was materially misstated based on the total population of the account balance.This is an example of which of the following types of sampling risks?

Accepted Answer

A)   Incorrect rejection
B)   Incorrect acceptance
C)   Assessing control risk too low
D)   Assessing control risk too highE) A) and B)
F) A) and C)

Question 12

While performing an audit of accounts receivable,Allen,CPA,found that the sample results supported the conclusion that the accounts receivable balance was materially misstated.However,the balance was,in fact,not materially misstated.This situation illustrates the risk of

Accepted Answer

A)   incorrect rejection.
B)   incorrect acceptance.
C)   assessing control risk too low.
D)   assessing control risk too high.E) A) and C)
F) A) and B) A

Question 13

Which of the following sampling activities is not performed during the planning stage of the audit?

Accepted Answer

A)   Define the population.
B)   Determine the sample size.
C)   Determine the objective of sampling.
D)   Define the characteristic of interest.E) None of the above
F) C) and D)

Question 14

Which of the following is not an advantage of statistical sampling?

Accepted Answer

A)   Statistical sampling provides auditors with a sufficient sample size that controls exposure to sampling risk.
B)   Statistical sampling uses selection methods that expose all items in the population to selection.
C)   Statistical sampling evaluates the sample evidence in such a manner that controls exposure to sampling risk.
D)   Statistical sampling deploys audit procedures that all auditors to more effectively evaluate evidence.E) All of the above
F) C) and D)

Question 15

Assume that the audit team wishes to determine the extent to which a particular control policy was functioning as intended.Identifying applications of the control throughout the period under audit would be most closely related to which of the following steps in sampling?

Accepted Answer

A)   Determining the objective of sampling
B)   Defining the characteristic of interest
C)   Defining the population
D)   Determining the sample sizeE) All of the above
F) B) and C) C

Question 16

Which of the following types of sampling applications can appropriately be used under generally accepted auditing standards?

Accepted Answer

A)   Statistical sampling: Yes; Nonstatistical sampling: Yes
B)   Statistical sampling: Yes; Nonstatistical sampling: No
C)   Statistical sampling: No; Nonstatistical sampling: Yes
D)   Statistical sampling: No; Nonstatistical sampling: NoE) B) and C)
F) A) and B)

Question 17

For each of the following situations related to determining the average weight of a National Football League player,indicate how the appropriate sample size would change by using the letter I (increase),D (decrease),or N (no change).Assume that all other factors are held constant.
___ 1.The desired level of precision changes from 20 pounds to 10 pounds.
___ 2.The sampling risk increases from 5 percent to 10 percent.
___ 3.The number of football players in the population increases from 1,400 to 1,600.
___ 4.You initially want to estimate the weight for offensive linemen only but decide to in include quarterbacks,running banks,and placekickers.
___ 5.Your initial sample estimate changes from 250 pounds to 230 pounds.

Accepted Answer

1.I; 2.D; 3.I; 4.I (...

Question 18

What is the primary drawback with respect to the use of sampling?

Accepted Answer

A)   Individuals may fail to obtain a true understanding of the question they are examining.
B)   The time spent in planning and selecting the sample may exceed the time savings from examining only a subset of the items.
C)   The conclusion reached by examining a sample of items may differ from the conclusion that would be reached if the entire population were examined.
D)   Sampling cannot be used to examine account balances that are material to the financial statements.E) B) and C)
F) A) and B)

Question 19

Nonsampling risk can occur in which of the following types of sampling plans?

Accepted Answer

A)   Statistical sampling: Yes; Nonstatistical sampling: Yes
B)   Statistical sampling: Yes; Nonstatistical sampling: No
C)   Statistical sampling: No; Nonstatistical sampling: Yes
D)   Statistical sampling: No; Nonstatistical sampling: NoE) A) and D)
F) A) and C)

Question 20

Tests performed by auditors that examine evidence for both control attributes and monetary misstatements are known as

Accepted Answer

A)   standard-purpose tests.
B)   multi-function tests.
C)   dual-purpose tests.
D)   substantive tests.E) None of the above
F) A) and C)

Exam 17: Overview of Sampling

Which of the following statements about audit sampling risks is correct?

Correct Answer
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In which of the following types of sampling applications is the auditor exposed to sampling risk?

Correct Answer
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Which of the following does not have a direct relationship with sample size?

Correct Answer
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C

Which of the following is the least likely outcome when the upper limit on misstatement exceeds the tolerable misstatement?

Correct Answer
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Which of the following most closely represents an unrestricted random selection procedure?

Correct Answer
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Which of the following situations is true with respect to sampling?

Correct Answer
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Which of the following appropriately describes the effect of sample size on sampling risk?

Correct Answer
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Which of the following is the most likely outcome when the upper limit rate of deviation is less than the tolerable rate of deviation?

Correct Answer
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Correct Answer
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1.A; 2.A; ...
View Answer

An auditor is reviewing a sample of cash disbursements to ensure that the appropriate supporting documents were received prior to payment.Which type of sampling approach would the auditor use to perform this test?

Correct Answer
verified

An auditor discovers that an account balance believed not to be materially misstated based on an audit sample was materially misstated based on the total population of the account balance.This is an example of which of the following types of sampling risks?

Correct Answer
verified

While performing an audit of accounts receivable,Allen,CPA,found that the sample results supported the conclusion that the accounts receivable balance was materially misstated.However,the balance was,in fact,not materially misstated.This situation illustrates the risk of

Correct Answer
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A

Which of the following sampling activities is not performed during the planning stage of the audit?

Correct Answer
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Which of the following is not an advantage of statistical sampling?

Correct Answer
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Assume that the audit team wishes to determine the extent to which a particular control policy was functioning as intended.Identifying applications of the control throughout the period under audit would be most closely related to which of the following steps in sampling?

Correct Answer
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C

Which of the following types of sampling applications can appropriately be used under generally accepted auditing standards?

Correct Answer
verified

Correct Answer
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1.I; 2.D; 3.I; 4.I (...
View Answer

What is the primary drawback with respect to the use of sampling?

Correct Answer
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Nonsampling risk can occur in which of the following types of sampling plans?

Correct Answer
verified

Tests performed by auditors that examine evidence for both control attributes and monetary misstatements are known as

Correct Answer
verified

Exam 17: Overview of Sampling

Which of the following statements about audit sampling risks is correct?

Correct AnswerverifiedShow Answer

In which of the following types of sampling applications is the auditor exposed to sampling risk?

Correct AnswerverifiedShow Answer

Which of the following does not have a direct relationship with sample size?

Correct AnswerverifiedC

Which of the following is the least likely outcome when the upper limit on misstatement exceeds the tolerable misstatement?

Correct AnswerverifiedShow Answer

Which of the following most closely represents an unrestricted random selection procedure?

Correct AnswerverifiedShow Answer

Which of the following situations is true with respect to sampling?

Correct AnswerverifiedShow Answer

Which of the following appropriately describes the effect of sample size on sampling risk?

Correct AnswerverifiedShow Answer

Which of the following is the most likely outcome when the upper limit rate of deviation is less than the tolerable rate of deviation?

Correct AnswerverifiedShow Answer

Correct Answerverified1.A; 2.A; ...View AnswerShow Answer

An auditor is reviewing a sample of cash disbursements to ensure that the appropriate supporting documents were received prior to payment.Which type of sampling approach would the auditor use to perform this test?

Correct AnswerverifiedShow Answer

An auditor discovers that an account balance believed not to be materially misstated based on an audit sample was materially misstated based on the total population of the account balance.This is an example of which of the following types of sampling risks?

Correct AnswerverifiedShow Answer

While performing an audit of accounts receivable,Allen,CPA,found that the sample results supported the conclusion that the accounts receivable balance was materially misstated.However,the balance was,in fact,not materially misstated.This situation illustrates the risk of

Correct AnswerverifiedA

Which of the following sampling activities is not performed during the planning stage of the audit?

Correct AnswerverifiedShow Answer

Which of the following is not an advantage of statistical sampling?

Correct AnswerverifiedShow Answer

Assume that the audit team wishes to determine the extent to which a particular control policy was functioning as intended.Identifying applications of the control throughout the period under audit would be most closely related to which of the following steps in sampling?

Correct AnswerverifiedC

Which of the following types of sampling applications can appropriately be used under generally accepted auditing standards?

Correct AnswerverifiedShow Answer

Correct Answerverified1.I; 2.D; 3.I; 4.I (...View AnswerShow Answer

What is the primary drawback with respect to the use of sampling?

Correct AnswerverifiedShow Answer

Nonsampling risk can occur in which of the following types of sampling plans?

Correct AnswerverifiedShow Answer

Tests performed by auditors that examine evidence for both control attributes and monetary misstatements are known as

Correct AnswerverifiedShow Answer

Correct Answer
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C

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1.A; 2.A; ...
View Answer

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A

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C

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1.I; 2.D; 3.I; 4.I (...
View Answer

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