Question 1

Match five of the terms (a- k) with the definitions provided below (1- 5):
a. haphazard selection
b. attributes sampling
c. block sample selection
d. judgemental sampling
e. non- probabilistic sample selection
f. probabilistic sample selection
g. random sample
h. representative sample
i. statistical sampling
j. systematic sample selection
k. sampling distribution
1. The use of mathematical measurement techniques to calculate formal statistical results and quantify sampling risk.
2. A non- probabilistic method of sample selection in which items are selected in measured sequences.
3. A sample whose characteristics are the same as those of the population.
4. A statistical, probabilistic method of sample evaluation that results in an estimate of the proportion of items in a population containing a characteristic of interest.
5. A non- probabilistic method of sample selection in which items are chosen without regard to their size, source or other distinguishing characteristics.

Accepted Answer

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Question 2

Estimated misstatement in the population and sample size are inversely related; that is, as estimated misstatement increases, sample size decreases.

Accepted Answer

A) True 
 B)False

Question 3

Which one of the following statements is NOT correct regarding probabilistic and non- probabilistic sample selection?

Accepted Answer

A)   It is not acceptable to make nonstatistical evaluations using probabilistic selection.
B)   Probabilistic selection is required for all statistical sampling methods.
C)   In probabilistic selection, every population item has a known chance of being selected.
D)   Both methods are acceptable and commonly used.

Question 4

When a small preliminary sample is used to estimate the population deviation rate, it (the preliminary sample) cannot be included in the ultimate sample.

Accepted Answer

A) True 
 B)False

Question 5

Which one of the following statements regarding block sampling is NOT true?

Accepted Answer

A)   A 'reasonable number' for most situations is probably at least six blocks from six different months.
B)   Once the first item in the block is selected, the remainder of the block is chosen automatically.
C)   It is acceptable to use block sampling for tests of transactions only if a reasonable number of blocks are used.
D)   Block sampling is the selection of several items in sequence.

Question 6

One of the causes of non- sampling error is:

Accepted Answer

A)   the use of inappropriate or ineffective audit procedures.
B)   the use of attributes sampling instead of variables sampling.
C)   failure to draw a representative sample.
D)   failure to draw a random sample.

Question 7

Tolerable deviation rate (TDR) is inversely related to sample size; that is, as TDR increases, sample size decreases.

Accepted Answer

A) True 
 B)False

Question 8

Match five of the terms (a- l) with the definitions provided below (1- 5):
a. allowable risk of incorrect acceptance
b. allowable 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. A method of variables sampling in which the auditor estimates the population misstatement by multiplying the portion of sample dollars misstated by the total recorded population book value and also calculates sampling risk.
2. A method of projecting from the sample to the population to estimate the population misstatement, commonly by assuming that misstatements in the unaudited population are proportional to the misstatements found in the sample.
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 method of sampling in which all the elements in the total population are divided into two or more subpopulations that are independently tested and statistically measured.
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 populations items and also calculates sampling risk.

Accepted Answer

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Question 9

In estimating the population misstatement, the first step in projecting from the sample to the population is to:

Accepted Answer

A)   determine the population mean.
B)   calculate the precision interval.
C)   make a point estimate.
D)   revise the upper error bound. C

Question 10

In audit sampling, an advance estimate of the deviation rate is necessary to plan the appropriate sample size. The relationship of estimated population deviation rate (EPDR)  to sample size is:

Accepted Answer

A)   indeterminate.
B)   direct (small EPDR = small sample) .
C)   inverse (small EPDR = large sample) .
D)   a variable (sometimes small, sometimes large)  dependent on other factors present.

Question 11

Which one is NOT a sample selection method commonly associated with nonstatistical audit units?

Accepted Answer

A)   Directed sample selection
B)   Probability proportional to size sample selection
C)   Block sample selection
D)   Haphazard sample selection B

Question 12

If an auditor, planning to use statistical sampling, is concerned with the dollar value of mathematical errors in sales invoices, the auditor would most likely NOT utilise:

Accepted Answer

A)   sampling for variables.
B)   stratified random sampling.
C)   random sampling.
D)   sampling for attributes.

Question 13

Which one of the following material occurrences would be most likely to attract the auditor's attention?

Accepted Answer

A)   Deviations from client's established control procedures
B)   Monetary errors or irregularities in populations of account balance details
C)   Deviations from client's budgeted values
D)   Both A and B

Question 14

When using nonstatistical sampling, the sample must be a probabilistic one.

Accepted Answer

A) True 
 B)False

Question 15

In performing a review of his client's cash disbursements, an auditor uses systematic sample selection with a random start. The primary disadvantage of systematic sample selection is that population items:

Accepted Answer

A)   may occur twice in the sample.
B)   must be replaced in the population after sampling to permit valid statistical inference.
C)   must be reordered in a systematic pattern before the sample can be drawn.
D)   may occur in a systematic pattern, thus negating the randomness of the sample.

Question 16

If the auditor believes that there will be more than just a few exceptions discovered and desires an accurate estimate of the dollar value of the exceptions, he or she will use:

Accepted Answer

A)   attributes sampling.
B)   variables sampling.
C)   block sampling.
D)   monetary- unit sampling. B

Question 17

Discuss what is meant by 'non- sampling risk'.

Accepted Answer

Non- sampling error ...

Question 18

The initial sample size is so- called because:

Accepted Answer

A)   the deviations must be evaluated before deciding whether the sample is sufficiently large to achieve the objectives.
B)   the auditor must take several samples to ensure that the final sample is representative of the population.
C)   the auditor must take several samples to ensure randomness.
D)   there is always another sample to be done.

Question 19

Which of the following factors is generally NOT considered in determining sample size for a test of controls?

Accepted Answer

A)   Population size
B)   Expected population deviation rate
C)   Risk of assessing control risk too low
D)   Tolerable deviation rate

Question 20

Which one of the following BEST describes what the auditor means by the rate of occurrence in the audit sampling plan?

Accepted Answer

A)   The number of errors that can reasonably be expected to be found in 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 frequency with which a certain characteristic occurs within a population

Exam 14: Audit Sampling

Correct Answer
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Estimated misstatement in the population and sample size are inversely related; that is, as estimated misstatement increases, sample size decreases.

Correct Answer
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Which one of the following statements is NOT correct regarding probabilistic and non- probabilistic sample selection?

Correct Answer
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When a small preliminary sample is used to estimate the population deviation rate, it (the preliminary sample) cannot be included in the ultimate sample.

Correct Answer
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Which one of the following statements regarding block sampling is NOT true?

Correct Answer
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One of the causes of non- sampling error is:

Correct Answer
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Tolerable deviation rate (TDR) is inversely related to sample size; that is, as TDR increases, sample size decreases.

Correct Answer
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Correct Answer
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1- i
2- g
...
View Answer

In estimating the population misstatement, the first step in projecting from the sample to the population is to:

Correct Answer
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C

In audit sampling, an advance estimate of the deviation rate is necessary to plan the appropriate sample size. The relationship of estimated population deviation rate (EPDR) to sample size is:

Correct Answer
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Which one is NOT a sample selection method commonly associated with nonstatistical audit units?

Correct Answer
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B

If an auditor, planning to use statistical sampling, is concerned with the dollar value of mathematical errors in sales invoices, the auditor would most likely NOT utilise:

Correct Answer
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Which one of the following material occurrences would be most likely to attract the auditor's attention?

Correct Answer
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When using nonstatistical sampling, the sample must be a probabilistic one.

Correct Answer
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In performing a review of his client's cash disbursements, an auditor uses systematic sample selection with a random start. The primary disadvantage of systematic sample selection is that population items:

Correct Answer
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If the auditor believes that there will be more than just a few exceptions discovered and desires an accurate estimate of the dollar value of the exceptions, he or she will use:

Correct Answer
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B

Discuss what is meant by 'non- sampling risk'.

Correct Answer
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Non- sampling error ...
View Answer

The initial sample size is so- called because:

Correct Answer
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Which of the following factors is generally NOT considered in determining sample size for a test of controls?

Correct Answer
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Which one of the following BEST describes what the auditor means by the rate of occurrence in the audit sampling plan?

Correct Answer
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Exam 14: Audit Sampling

Correct Answerverified1- i2- c...View AnswerShow Answer

Estimated misstatement in the population and sample size are inversely related; that is, as estimated misstatement increases, sample size decreases.

Correct AnswerverifiedShow Answer

Which one of the following statements is NOT correct regarding probabilistic and non- probabilistic sample selection?

Correct AnswerverifiedShow Answer

When a small preliminary sample is used to estimate the population deviation rate, it (the preliminary sample) cannot be included in the ultimate sample.

Correct AnswerverifiedShow Answer

Which one of the following statements regarding block sampling is NOT true?

Correct AnswerverifiedShow Answer

One of the causes of non- sampling error is:

Correct AnswerverifiedShow Answer

Tolerable deviation rate (TDR) is inversely related to sample size; that is, as TDR increases, sample size decreases.

Correct AnswerverifiedShow Answer

Correct Answerverified1- i2- g...View AnswerShow Answer

In estimating the population misstatement, the first step in projecting from the sample to the population is to:

Correct AnswerverifiedC

In audit sampling, an advance estimate of the deviation rate is necessary to plan the appropriate sample size. The relationship of estimated population deviation rate (EPDR) to sample size is:

Correct AnswerverifiedShow Answer

Which one is NOT a sample selection method commonly associated with nonstatistical audit units?

Correct AnswerverifiedB

If an auditor, planning to use statistical sampling, is concerned with the dollar value of mathematical errors in sales invoices, the auditor would most likely NOT utilise:

Correct AnswerverifiedShow Answer

Which one of the following material occurrences would be most likely to attract the auditor's attention?

Correct AnswerverifiedShow Answer

When using nonstatistical sampling, the sample must be a probabilistic one.

Correct AnswerverifiedShow Answer

In performing a review of his client's cash disbursements, an auditor uses systematic sample selection with a random start. The primary disadvantage of systematic sample selection is that population items:

Correct AnswerverifiedShow Answer

If the auditor believes that there will be more than just a few exceptions discovered and desires an accurate estimate of the dollar value of the exceptions, he or she will use:

Correct AnswerverifiedB

Discuss what is meant by 'non- sampling risk'.

Correct AnswerverifiedNon- sampling error ...View AnswerShow Answer

The initial sample size is so- called because:

Correct AnswerverifiedShow Answer

Which of the following factors is generally NOT considered in determining sample size for a test of controls?

Correct AnswerverifiedShow Answer

Which one of the following BEST describes what the auditor means by the rate of occurrence in the audit sampling plan?

Correct AnswerverifiedShow Answer

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2- c
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C

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B

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B

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Non- sampling error ...
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