QUESTION 5
In monetary-unit sampling, population size is
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The dollar balance in an account |
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The number of items in an account |
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Unrelated to sample size |
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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?
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The computed upper deviation rate is less than the tolerable rate |
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The estimated population deviation rate is greater than the confidence level |
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The estimated population deviation rate is greater than the tolerable rate |
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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
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Not be able to determine the acceptability of the receivable balance |
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Accept the balance but with a lower level of confidence |
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Take a larger sample before totally rejecting the balance and requiring adjustments |
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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?
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It can only be used for substantive testing of asset account |
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It requires the use of a computer system to perform the required calculations |
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Misstatement rates must be large and the misstatements must be overstatements |
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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?
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The risk of incorrect rejection |
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Inherent risk |
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The risk of incorrect acceptance |
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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?
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The auditor must increase control risk because the risk of assessing control risk too low is greater than the tolerable deviation rate |
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The auditor is likely to increase control risk because the risk of assessing control risk too low is greater than the tolerable deviation rate |
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The auditor must increase control risk because the computed upper deviation rate is greater than the tolerable deviation rate |
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The auditor is likely to increase control risk because the computed upper deviation rate is greater than the tolerable deviation rate |
