Question 1

When auditing accounts payable using classical variables sampling,Sue finds evidence indicating that the account may be materially misstated.What are Sue's options?

Accepted Answer

The answer of When auditing accounts payable using classical variables...

Question 2

In a monetary-unit sample with a sampling interval of $10,000,an auditor discovered that a selected account receivable with a recorded amount of $5,000 had an audit amount of $2,000.The projected misstatement of this sample was
A) $3,000.
B) $4,000.
C) $6,000.
D) $8,000.

Accepted Answer

The answer of In a monetary-unit sample with a sampling...

Question 3

Summarize the concept behind monetary-unit sampling (MUS).How does MUS use attribute-sampling theory?

Accepted Answer

The answer of Summarize the concept behind monetary-unit sampling (MUS).How...

Question 4

An auditor has taken a large sample from an audit population that is skewed in the sense that it contains a large number of small dollar balances.The auditor can conclude
A) The sampling distribution is not normal; therefore MUS sampling will more accurately define the nature of the population.
B) The sampling distribution is normal; therefore the confidence coefficient value can be used to evaluate the sample results.
C) The sampling distribution is not normal; thus attribute sampling is the only alternative statistical tool that can be appropriately used.
D) None of the above answers is correct.

Accepted Answer

The Central Limit Theorem states that the sampling distribution of the sample mean will be approximately normal if the sample size is large enough, regardless of the population's distribution.

Question 5

An auditor established a $60,000 tolerable misstatement for an account balance of $1,000,000.The auditor selected a sample of every twentieth item from the population of 1,000 items that represented the asset account balance and discovered overstatements of $3,700 and understatements of $200.Under these circumstances,the auditor most likely would conclude that
A) There is an unacceptably high risk that the actual misstatements in the population exceed the tolerable misstatement because the total projected misstatement is more than the tolerable misstatement.
B) There is an unacceptably high risk that the tolerable misstatement exceeds the sum of actual overstatements and understatements.
C) The asset account is fairly stated because the total projected misstatement is less than the tolerable misstatement.
D) The asset account is fairly stated because the tolerable misstatement exceeds the net of projected actual overstatements and understatements.

Accepted Answer

The answer of An auditor established a $60,000 tolerable misstatement...

Question 6

In nonstatistical sampling,describe the two methods auditors use to project sample results to the population.How does an auditor determine which method to use?

Accepted Answer

The answer of In nonstatistical sampling,describe the two methods auditors...

Question 7

Match each factor of sample size to (1)its relationship to sample size (A-Direct or B-Inverse)and (2)the appropriate effect on the sample size if the factor increases (C-Increase or D-Decrease).
1.Tolerable misstatement
2.Population size
3.Desired confidence level
4.Expected misstatement

Accepted Answer

The answer of Match each factor of sample size to...

Question 8

An auditor is performing substantive procedures of pricing and extension of perpetual inventory balances consisting of a large number of items.Past experience indicates numerous pricing and extension errors.Which of the following statistical sampling approaches is most appropriate?
A) Unstratified mean-per-unit.
B) Monetary-unit sampling.
C) Stop or go.
D) Difference projection.

Accepted Answer

The answer of An auditor is performing substantive procedures of...

Question 9

Matching

Accepted Answer

The answer of Matching
 ...

Question 10

Whenever a statistical method is used,a decision rule determines whether the population is acceptable.The decision rule for monetary-unit sampling is "Accept the conclusion that the book value is not misstated by a material amount if _________________________."

Accepted Answer

The answer of Whenever a statistical method is used,a decision...

Question 11

Describe two advantages and two disadvantages of monetary-use sampling (MUS).

Accepted Answer

The answer of Describe two advantages and two disadvantages of...

Question 12

What is one advantage and one disadvantage of classical variables sampling?

Accepted Answer

The answer of What is one advantage and one disadvantage...

Question 13

You are auditing accounts receivable for a small company and have found the following results:
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Number and Size of Client } & \begin{array} { c } 
\text { Book Value of } \
\text { Accounts }
\end{array} & \begin{array} { c } 
\text { Book Value of } \
\text { Stratum }
\end{array} & \begin{array} { c } 
\text { Sample } \
\text { Sample }
\end{array} \
\hline 1,202 \text { accounts } < \$ 1,000 & \$ 948,378 & \$ 59,175 & \$ 51,256 \
\hline 534 \text { accounts } > \$ 1,000 & \$ 777,504 & \$ 36,400 & \$ 34,400 \
\hline
\end{array}$$ Use ratio projection to project your results.

Accepted Answer

The answer of You are auditing accounts receivable for a...

Question 14

You have been placed in charge of determining the sample size for an audit of accounts receivable.Your superior would like a confidence level of 99%.How does this affect your determination of sample size?
 What can you infer about the level of risk of incorrect acceptance that your superior is willing to accept?

Accepted Answer

The answer of You have been placed in charge of...

Question 15

Match between columns
                        Premises:  an individual dollar
 the total of the projected misstatement plus the allowance for sampling risk
 the account or transaction that contains the selected dollar
 the difference between monetary amounts in the client's records and amounts supported by audit evidence

Accepted Answer

The Answer of Mus logical unit and MUS Sampling unit is...

Question 16

Match between columns
                        Premises:  Tolerable misstatement
 Population size
 Desired confidence level
 Expected misstatement

Accepted Answer

The Answer of Direct and Inverse and Increase and Decrease is...

Quiz 9: Audit Sampling: An Application to Substantive Tests of Account Balances

When auditing accounts payable using classical variables sampling,Sue finds evidence indicating that the account may be materially misstated.What are Sue's options?

In a monetary-unit sample with a sampling interval of $10,000,an auditor discovered that a selected account receivable with a recorded amount of $5,000 had an audit amount of $2,000.The projected misstatement of this sample was

Summarize the concept behind monetary-unit sampling (MUS).How does MUS use attribute-sampling theory?

An auditor has taken a large sample from an audit population that is skewed in the sense that it contains a large number of small dollar balances.The auditor can conclude

In nonstatistical sampling,describe the two methods auditors use to project sample results to the population.How does an auditor determine which method to use?

Match each factor of sample size to (1)its relationship to sample size (A-Direct or B-Inverse)and (2)the appropriate effect on the sample size if the factor increases (C-Increase or D-Decrease). 1.Tolerable misstatement 2.Population size 3.Desired confidence level 4.Expected misstatement

An auditor is performing substantive procedures of pricing and extension of perpetual inventory balances consisting of a large number of items.Past experience indicates numerous pricing and extension errors.Which of the following statistical sampling approaches is most appropriate?

Matching

Whenever a statistical method is used,a decision rule determines whether the population is acceptable.The decision rule for monetary-unit sampling is "Accept the conclusion that the book value is not misstated by a material amount if _________________________."

Describe two advantages and two disadvantages of monetary-use sampling (MUS).

What is one advantage and one disadvantage of classical variables sampling?

Matching

Match each factor with the first sample size that have the two choices (A-Direct or B-Inverse) and the second sample of appropriate effect of the factor increases (C-Increase or D-Decrease).