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Question(s) / Instruction(s):

ACC3118

1) Which one of the following is not a problem with monetary-unit selection?

A) Population items with a zero recorded balance

B) Accounts with small recorded balances that are significantly understated

C) Accounts with negative balances

D) Population items that should have a zero balance but do not

 

2) The appropriate assumption to make regarding the overall percent of error in those population

items containing an error is:

A) set after a quantitative analysis of client’s internal control system.

B) based on statistical analysis using confidence limits.

C) based on the auditor’s personal judgment in the circumstances.

D) determined using random number tables.

 

3) Which one of the following statements regarding the process of defining the population is not

correct?

A) The population represents the body of data about which the auditor wishes to generalise.

B) The auditor can define the population to include whatever data is desired.

C) The auditor can randomly sample from whatever part of the population that he or she

chooses.

D) The auditor may generalize only about that population which has been sampled.

 

4) One of the causes of non-sampling error is:

A) the use of attributes sampling instead of variables sampling.

B) failure to draw a random sample.

C) failure to draw a representative sample.

D) the use of inappropriate or ineffective audit procedures.

 

5) Non-probabilistic sample selection methods are not based on strict mathematical probabilities,

therefore:

A) they are discouraged by the Corporations Act.

B) they are forbidden by the Statements of Auditing Standards.

C) the representativeness of the sample may be difficult to determine.

D) they are not as good as statistical sampling.

 

6) Which of the following factors is generally not considered in determining sample size for a test of

controls?

A) Population size

B) Risk of assessing control risk too low

C) Expected population deviation rate

D) Tolerable deviation rate

 

7) Which one of the following statements is a valid criticism of the use of non-statistical sampling

methods?

A) Conclusions may be drawn in more precise ways when using statistical sampling methods.

B) Many audit texts, such as footing of journals, must be performed outside a statistical

sampling context.

C) Non-statistical sampling does not differ substantially from statistical sampling methods.

D) The cost of performing random selection of testing often exceeds the benefits.

 

8) When using systematic selection procedures with monetary-unit sampling of accounts receivable,

the interval is determined by:

A) dividing the population size by the account receivable with the largest dollar value.

B) divided the population size by the desired sample size.

C) divided the sample size by the account with the largest dollar value.

D) consulting a random number table.

 

9) What is an auditor’s evaluation of a statistical sample for attributes when a test of 100 documents

results in four deviations if the tolerable deviation rate is 5%, the expected population deviation

rate is 3% and the allowance for sampling risk is 2%?

A) Modify planned reliance on the control because the sample deviation rate plus the allowance

for sampling risk exceeds the tolerable rate

B) Accept the sample results as support for planned reliance on the control because the sample

deviation rate plus the allowance for sampling risk exceeds the tolerable rate

C) Modify planned reliance on the control because the tolerable rate plus the allowance for

sampling risk exceeds the expected population deviation rate

D) Accept the sample results as support for planned reliance on the control because the tolerable

rate less the allowance or sampling risk equals the expected population deviation rate

 

10) Audit sampling would be an appropriate method to use on which one of the following procedures

in an audit program?

A) Observe whether the duties of the accounts receivable clerk are separate from handling cash

B) Review sales transactions for large and unreasonable amounts

C) Review the aged schedule of accounts receivable to determine if receivables from officers are

included

D) Examine a sample of duplicate sales invoices for credit approval by the credit manager

 

11) When the auditor goes through a population and selects items for the sample without regard to

their size, source or other distinguishing characteristics, it is called:

A) block sample selection.

B) statistical selection.

C) systematic sample selection.

D) haphazard selection.

 

12) The risk which the auditor is willing to take of accepting a control as being effective when it is not

is the:

A) tolerable deviation rate (TDR).

B) sample deviation rate (SDR).

C) acceptable risk of over-reliance (ARO).

D) estimated population deviation rate.

 

13) In monetary-unit sampling, items containing large understatement errors:

A) have an increased probability of being included in the sample.

B) are of less concern than those with large overstatement errors.

C) may have a small recorded value due to those errors.

D) all of the above.

 

14) Difference estimation, ratio estimation and mean-per-unit estimation are all techniques that

constitute the general class of methods called:

A) block sampling.

B) attributes sampling.

C) monetary-unit sampling.

 D) variables sampling.

 

15) When using monetary-unit sampling, the recorded dollar population is a definition of:

A) the items in the population which the auditor has included in the sample.

B) the population size.

C) the items in the population which contain errors.

D) the items in the sample which contain errors.

 

16) A sample in which every possible combination of items in the population has an equal chance of

constituting the sample is a:

A) judgment sample.

B) random sample.

C) statistical sample.

D) representative sample.

 

17) In audit sampling, an advance estimate of the expected population deviation rate is necessary to

plan the appropriate sample size. The relationship of expected population deviation rate (EPDR) to

sample size is:

A) inverse (small EPDR = large sample).

B) direct (small EPDR = small sample).

C) a variable (sometimes small, sometimes large) dependent on other factors present.

D) indeterminate.

 

18) As a result of tests of controls, an auditor assessed control risk too low and decreased substantive

testing. This occurred because the true deviation rate in the population was:

A) less than the risk of assessing control risk too low based on the auditor’s sample.

B) less than the deviation rate in the auditor’s sample.

C) more than the deviation rate in the auditor’s sample.

D) more than the risk of assessing control risk too low based on the auditor’s sample.

 

19) Which one of the following best describes what the auditor means by the rate of occurrence in the

audit sampling plan?

A) The frequency with which a certain characteristic occurs within a population

B) The dollar range within which the true population total can be expected to fall

C) The degree of confidence that the sample is representative of the population

D) The number of errors that can reasonably be expected to be found in a population

 

20) Sampling risk (sampling error) is an inherent part of sampling which results from:

A) weaknesses in client’s internal control system.

B) testing less than the entire population.

C) failure to recognize exceptions.

D) inappropriate audit procedures.

 

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