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Auditing Chapter 8 Homework
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Questions in this quiz (30)
1For which of the following audit procedures would sampling be most appropriate?
- AInquiry
- BConfirmation
- CAnalytics
- DObservation
2Which one of the following is not a decision the auditor makes when using attributes sampling?
- AWhether to document all phases of the sampling process
- BEvaluation of sample information
- CSelection of items included in the sample
- DSample size
3Which one of the following is a decision the auditor makes when using attributes sampling?
- AThe sampling unit
- BPeriod covered by testing
- CCompleteness of the population
- DAll of the above are auditor decisions
4Which of the following describes sampling risk?
- AThe sample size will be larger than needed.
- BThe auditor incorrectly applies sampling methodology.
- CThe population will not contain characteristics representative of the sample such that inferences made about that sample will be incorrect.
- DThe sample will not contain characteristics representative of the population such that inferences made about that population will be incorrect.
5Which of the following occurs when, based on sample results, control risk is assessed excessively high?
- AA less expensive audit
- BErrors that are more likely to occur than anticipated
- CReduction of substantive testing
- DAudit inefficiency
6Concluding that the book value of inventory is correct when it is materially misstated is an example of which of the following risks?
- AIncorrect rejection
- BIncorrect acceptance
- CInsufficient sample size
- DNone of the above
7When performing sampling, the auditor is most concerned with which of the following?
- ARisk of incorrect acceptance
- BRisk of excess sample size
- CRisk of errors in the population
- DRisk of incorrect rejection
8While auditors may use either statistical or nonstatistical sampling, some auditors restrict the use of nonstatistical sampling for what reason?
- AIt is less objective
- BIt is less effective
- CIt is less efficient
- DIt is less risky
9Which of the following is the level at which the control’s failure to operate would cause the auditor to conclude that the control is not effective and would likely change the auditor’s planned assessment of control risk in performing tests of account balances?
- AAllowable risk of assessing control risk too low
- BAllowance for sampling error
- CTolerable failure rate
- DExpected failure rate
10When performing attributes sampling, which of the following varies directly with the sample size?
- AThe tolerable failure rate
- BThe risk of over-reliance
- CThe non-sampling risk
- DThe expected failure rate
11In analyzing misstatements using sampling techniques, the auditor should analyze the misstatements in what manners?
- AAbsolutely and proportionately
- BHaphazardly and randomly
- CMethodically and systematically
- DQualitatively and quantitatively
12In testing account balances, haphazard sampling is an acceptable method of sampling provided the auditor believes the sample to be which of the following?
- AStatistically sound
- BRepresentative of the population
- CIn the upper stratum
- DRepresentative of the sample
13When determining sample size in attributes sampling, which of the following is usually true?
- ATolerable misstatement amount is determined
- BSampling risk will be too high
- CPopulation size is not a factor
- DA failure rate is not to be expected
14Which of the following is a factor that the auditor should consider when choosing between nonstatistical and statistical sampling?
- AWhether the audit staff is adequately trained to use statistical sampling
- BWhether the population lends itself to use a random-based selection method
- CWhether the auditor wants a statistical measure of the risk of drawing a wrong conclusion
- DAll of the above
15When confirming receivables in testing for overstatements, assume that there are few or no misstatements expected and the selection will be based on the dollar value of individual items. Which of the following is the auditor most likely to use?
- AStratified mean-per-unit sampling
- BAttribute sampling
- CRatio estimation sampling
- DMUS sampling
16The results of MUS sampling will be unacceptable when the total estimated misstatement exceeds which of the following?
- AThe tolerable misstatement amount
- BThe expected deviation rate
- CThe tolerable error rate
- DThe expected deviation amount
17MUS is based on which of following?
- AAttributes sampling
- BClassical variables sampling
- CExpected error sampling
- DPopulation variability sampling
18MUS is designed to test for which of the following?
- AUnderstatements
- BEither understatements or overstatements
- COverstatements
- DNeither understatements or overstatements
19When using MUS, an auditor found that the sampling interval should be $15,755. If selecting the sample manually, the auditor should round the sample interval to which of the following amounts?
- A$16,000
- B$15,000
- C$10,000
- D$14,000
20When planning a test of details using MUS sampling, tolerable misstatement is usually set at what level?
- ALower than the expected error amount
- BHigher than performance materiality
- CLower than performance materiality
- DHigher than the expected error amount
21In MUS, what is meant by a sampling interval of 900?
- AExpected misstatement is 900
- BEvery 900th dollar will be selected
- CTolerable misstatement is 900
- DEvery 900th item will be selected
22Which one of the following is a proper course of action for the auditor when the total estimated misstatement exceeds the tolerable misstatement?
- AThe auditor can ask the client to correct the known misstatements
- BThe auditor will analyze the detected misstatements for some common problems
- CThe auditor can expand the sample
- DAll of the above
23The auditor will do which of the following when the results of sample testing conclude that there is misstatement in excess of the tolerable misstatement?
- AThrow out the sample
- BPropose adjustments to the client
- CIssue a disclaimer of opinion
- DDisclose the misstatement in the client's financial statements
24In attributes sampling, which of the following does the risk of incorrect acceptance deal with?
- AEffectiveness
- BEfficiency
- CReliability
- DBoth A and B
25In attributes sampling, the risk of incorrect rejection deals with which of the following?
- AEffectiveness
- BEfficiency
- CReliability
- DBoth A and B
26Which of the following is a factor of nonsampling risk?
- AUsing non statistical sampling
- BUsing a random sample selection
- CHaving a sample which does not represent the population
- DNot carrying out the appropriate audit procedure
27In selecting a sample for attributes testing, haphazard selection involves which of the following approaches?
- AAn arbitrary selection with no conscious bias
- BEvery nth item being selected after a random start
- CSelecting all items on a day or week
- DEach item in the population having an equal chance of selection
28In selecting a sample for attributes testing, block sampling involves which of the following approaches?
- AAn arbitrary selection with no conscious bias
- BEvery nth item being selected after a random start
- CSelecting all items on a day or week
- DEach item in the population having an equal chance of selection
29Which of the following tasks is not performed by data analytics tools?
- AFooting a file
- BObtaining file statistics
- CChecking for gaps in processing sequences
- DPreparing custom reports
- EAll of the above tasks can be performed using data analytics tools
30Which of the following data analytics tools might an auditor use to test the completeness assertion for sales?
- AAnalyze data to assess the proper operation of sales cutoff tests around year-end
- BAge accounts receivable
- Cuse data visualization tools to evaluate disclosures about sales and profitability
- DAll of the above
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- Auditing Chapter 8 Homework
- Author
- Kayla Harbaugh
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- English
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