Question 1

Which of the following is not a type of statistical method that provides results in dollar terms?
A) Variables sampling
B) Attributes sampling
C) Monetary unit sampling
D) Sampling with probability proportional to size

Accepted Answer

Attributes sampling is a statistical method that classifies items as conforming or nonconforming to a specific characteristic, but it does not provide results in dollar terms. On the other hand, variables sampling, monetary unit sampling, and sampling with probability proportional to size are all types of statistical methods that provide results in dollar terms.

Question 2

Acceptable risk of incorrect rejection is the statistical risk that the auditor has concluded that a population is materially misstated when it is not.

Accepted Answer

Acceptable risk of incorrect rejection (ARIR) is also known as Type I error or alpha risk. It refers to the risk that the auditor may incorrectly conclude that a population is materially misstated when it is not. To manage this risk, auditors establish an acceptable level of ARIR that they are willing to tolerate.

Question 3

The population standard deviation has a significant effect on the computed precision interval.

Accepted Answer

The answer of The population standard deviation has a significant...

Question 4

When making statistical inferences,the auditor must remember that:
A) the true population value must always be known.
B) auditors can state the conclusions drawn from a confidence interval in different ways.
C) there can be no possibility that the sample is not sufficiently representative of the population.
D) the knowledge of sampling distributions does not help the auditors to draw statistical conclusions.

Accepted Answer

The auditor must remember that they can state the conclusions drawn from a confidence interval in different ways. It is not necessary to know the true population value and there can always be a possibility that the sample is not sufficiently representative of the population. Knowledge of sampling distributions is essential for drawing statistical conclusions.

Question 5

An important statistic to consider when using a statistical sampling audit plan is the population variability.The population variability is measured by the:
A) sample mean.
B) standard deviation.
C) standard error of the sample mean.
D) estimated population total minus the actual population.

Accepted Answer

Population variability is measured by the standard deviation, as it shows the extent to which data deviates from the mean in a population. This information can be used to determine the appropriate sample size and projection of findings to the entire population. The sample mean (A) and standard error of the sample mean (C) are calculated from the sample itself, and do not provide information about population variability. Estimated population total minus the actual population (D) is not a measure of variability.

Question 6

The sample size is inversely related to the computed precision interval in difference estimation; that is,as sample size increases,the computed precision interval decreases.

Accepted Answer

This statement is true. As the sample size increases, the standard error of the mean decreases and thus, the interval estimate becomes narrower, resulting in higher precision.

Question 7

Explain acceptable risk of incorrect acceptance and acceptable risk of incorrect rejection within the context of variables sampling.

Accepted Answer

The answer of Explain acceptable risk of incorrect acceptance and...

Question 8

The confidence limits in variables sampling are similar to the_________ in monetary-unit sampling.
A) point estimate
B) misstatement bounds
C) standard deviation
D) standard error of the mean

Accepted Answer

Confidence limits in variables sampling refer to the range of possible values within which the true population value of the variable being tested is likely to fall. This is similar to misstatement bounds in monetary-unit sampling, which refers to the range of possible misstatements that could be present in the population based on the sample results. Both of these methods involve setting bounds on the variables being tested to provide a level of assurance about the accuracy of the results.

Question 9

There are four steps to generalize from the sample to the population using difference estimation sampling.Identify each of these four steps.

Accepted Answer

The answer of There are four steps to generalize from...

Question 10

When working with the different variables methods:
A) difference estimation frequently results in larger sample sizes than any other method.
B) ratio estimation is the method preferred by most auditors since it is simpler to calculate confidence intervals.
C) the difference between the mean-per-unit estimate and the difference estimate is the definition of what is being measured.
D) stratification can only be used with difference estimation.

Accepted Answer

The difference between the mean-per-unit estimate and the difference estimate is the definition of what is being measured, which is the difference between two variables. Therefore, C is the correct choice. A is incorrect because difference estimation may result in smaller sample sizes than ratio estimation. B is incorrect because it is not necessarily true that auditors prefer ratio estimation over other methods. D is incorrect because stratification can be used with both difference and ratio estimation.

Question 11

In difference estimation sampling,the confidence limits are calculated by combining the point estimate of the total misstatements and the computed precision interval at the desired confidence level.

Accepted Answer

This statement accurately describes the calculation of confidence limits in difference estimation sampling.

Question 12

Match six of the terms (a-l)with the definitions provided below (1-6):
a.Acceptable risk of incorrect acceptance
b.Acceptable risk of incorrect rejection
c.Difference estimation
d.Misstatement bounds
e.Monetary unit sampling
f.Mean-per-unit estimation
g.Point estimate
h.Probability proportional to size sample selection
i.Ratio estimation
j.Statistical inferences
k.Stratified sampling
l.Variable sampling
________ 1.Conclusions drawn from sample results based on knowledge of sampling distributions.
________ 2.Sampling techniques for tests of details that use the statistical inference processes.
________ 3.The risk that the auditor is willing to take of concluding a balance is materially misstated when it is,in fact,fairly stated.
________ 4.A statistical sampling method that provides upper and lower misstatement bounds expressed in monetary amounts.
________ 5.A method of variables sampling in which the auditor estimates the population misstatement by multiplying the average misstatement in the sample by the total number of population items and also calculates sampling risk.
________ 6.The risk that the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance is greater than tolerable misstatement.

Accepted Answer

The answer of Match six of the terms (a-l)with the...

Question 13

Difference estimation frequently results in smaller sample sizes than any other variables sampling method.

Accepted Answer

Difference estimation involves taking the difference between two values in a population to estimate a total population value. This method often results in smaller sample sizes compared to other variables sampling methods like simple random sampling or stratified sampling, as it utilizes the variability within the population to increase efficiency.

Question 14

When using difference estimation,the precision interval is calculated by a statistical formula.

Accepted Answer

Precision interval, also called margin of error, is calculated using a statistical formula in difference estimation.

Quiz 17: Audit Sampling for Tests of Details of Balances

Which of the following is not a type of statistical method that provides results in dollar terms?

Acceptable risk of incorrect rejection is the statistical risk that the auditor has concluded that a population is materially misstated when it is not.

The population standard deviation has a significant effect on the computed precision interval.

When making statistical inferences,the auditor must remember that:

An important statistic to consider when using a statistical sampling audit plan is the population variability.The population variability is measured by the: