Select Page

QUESTION 5

In monetary-unit sampling, population size is

 The dollar balance in an account The number of items in an account Unrelated to sample size Included in the denominator of the formula to determine sample size

1 points

QUESTION 6

Which of the following would cause the auditor to not use attribute sampling?

 The computed upper deviation rate is less than the tolerable rate The estimated population deviation rate is greater than the confidence level The estimated population deviation rate is greater than the tolerable rate The risk of incorrect rejection is higher than the tolerable risk

1 points

QUESTION 7

The accounting department reports that the balance of accounts receivable is \$210,000. You are willing to accept that balance if it is within \$15,000 of the actual balance. Using a variables sampling plan, you compute a 95% confidence interval of \$208,000 to \$225,000. You would therefore

 Not be able to determine the acceptability of the receivable balance Accept the balance but with a lower level of confidence Take a larger sample before totally rejecting the balance and requiring adjustments Accept the \$210,000 balance because the confidence interval is within the materiality limits

1 points

QUESTION 8

Which of the following statements best describes an inherent limitation of the monetary-unit sampling method?

 It can only be used for substantive testing of asset account It requires the use of a computer system to perform the required calculations Misstatement rates must be large and the misstatements must be overstatements Misstatement rates must be small and the misstatements must be overstatements

1 points

QUESTION 9

Which of the following risks is related to efficiency of testing?

 The risk of incorrect rejection Inherent risk The risk of incorrect acceptance None of the above

1 points

QUESTION 10

For an attributes sampling plan, the tolerable deviation rate is 4%, the computed upper deviation rate is 7%, the sample deviation rate is 3%, and the risk of assessing control risk too low is 5%. Which of the following is true?

 The auditor must increase control risk because the risk of assessing control risk too low is greater than the tolerable deviation rate The auditor is likely to increase control risk because the risk of assessing control risk too low is greater than the tolerable deviation rate The auditor must increase control risk because the computed upper deviation rate is greater than the tolerable deviation rate The auditor is likely to increase control risk because the computed upper deviation rate is greater than the tolerable deviation rate