An auditor may decide to increase the risk of incorrect rejection when

a) Increased reliability from the sample is desired.

b) Many differences (audit value minus recorded value) are expected.

c) Initial sample results do not support the planned level of control risk.

d) The cost and effort of selecting additional sample items is low.

d) The cost and effort of selecting additional sample items is low.

2
To determine the number of items to be selected in a sample for a particular substantive test of
details, the auditor should consider all of the following except

a) Tolerable misstatement.

b) Deviation rate.

c) Allowable risk of incorrect acceptance. 'd) Characteristics of the population.

b) Deviation rate.

3
When using classical variables sampling for estimation, an auditor normally evaluates the
sampling results by calculating the possible error in either direction. This statistical concept is
known as

a) Precision.

b) Reliability.

c) Projected error.

d) Standard deviation.

a) Precision.
4
In planning a statistical sample for a test of controls, an auditor increased the expected
population deviation rate from the prior year’s rate because of the results of the prior year’s tests
of controls and the overall control environment. The auditor most likely would then increase the
planned

a) Tolerable rate.

b) Allowance for sampling risk.

c) Risk of assessing control risk too low.

d) Sample size.

d) Sample size

5
In estimation sampling for variables, which of the following must be known in order to estimate
the appropriate sample size required to meet the auditor’s needs in a given situation?

a) The qualitative aspects of errors.

b) The total dollar amount of the population.

c) The acceptable level of risk.

d) The estimated rate of error in the population.

c) The acceptable level of risk.

6
There are many kinds of statistical estimates that an auditor may find useful, but basically every
accounting estimate is either of a quantity or of an error rate. The statistical terms that roughly
correspond to "quantities" and "error rate," respectively, are

a) Attributes and variables.

b) Variables and attributes.

c) Constants and attributes.

d) Constants and variables.

b) Variables and attributes.

7
In connection with his test of the accuracy of inventory counts, a CPA decides to use discovery
sampling. Discovery sampling may be considered a special case of

a) Judgmental sampling.

b) Sampling for variables.

c) Stratified sampling.

d) Sampling for attributes.

d) Sampling for attributes.

8
If an auditor, planning to use statistical sampling, is concerned with the number of a client’s sales
invoices that contain mathematical errors, the auditor would most likely utilize

a) Random sampling with replacement.

b) Sampling for attributes.

c) Sampling for variables.

d) Stratified random sampling.

b) Sampling for attributes.

9
The objective of the allowance for sampling risk in sampling for tests of controls on internal
control is to

a) Determine the probability of the auditor’s conclusion based upon reliance factors.

b) Determine that financial statements taken as a whole are not materially in error.

c) Estimate the risk of incorrect acceptance of substantive tests.

d) Estimate the range of procedural deviations in the population.

d) Estimate the range of procedural deviations in the population.

10
The size of a sample designed for dual-purpose testing should be

a) The larger of the samples that would otherwise have been designed for the two separate
purposes.

b) The smaller of the samples that would otherwise have been designed for the two separate
purposes.

c) The combined total of the samples that would otherwise have been designed for the two
separate purposes.

d) More than the larger of the samples that would otherwise have been designated for the two
separate purposes, but less than the combined total of the samples that would otherwise have
been designed for the two separate purposes.

a) The larger of the samples that would otherwise have been designed for the two separate
purposes.

11
An advantage of statistical sampling over nonstatistical sampling is that statistical sampling helps
an auditor to

a) Minimize the failure to detect errors and irregularities.

b) Eliminate the risk of nonsampling errors.

c) Reduce the level of audit risk and materiality to a relatively low amount.

d) Measure the sufficiency of the audit evidence obtained.

d) Measure the sufficiency of the audit evidence obtained.

12
Which of the following would be a consideration in planning a sample for a test of subsequent
cash receipts?

a) Preliminary judgments about materiality levels.

b) The amount of bad debt write-offs in the prior year.

c) The size of the intercompany receivable balance.

d) The auditor’s allowable risk of assessing control risk is too low.

a) Preliminary judgments about materiality levels. The amount of bad debt write-offs in the prior
year.

13
Use the ratio method of sampling to calculate the year-end accounts payable audited balance
from the following data:

No. of accounts      Book              Audited

Pop Sample            4,100       $5,000,000   ?

                                200        $ 250,000    $300,000 

a) $6,150,000

b) $6,000,000

c) $5,125,000
d) $5,050,000

b) $6,000,000

14
Which of the following is the primary objective of probability-proportional-to-size sampling?

a) To identify overstatement errors. 

b) To increase the proportion of smaller-value items in the sample. 

c) To identify items where controls were not properly applied. 

d) To identify zero and negative balances.

 
 

a) To identify overstatement errors.

15
Which of the following would be a consideration in planning an auditor’s sample for a test of
controls?

a) Preliminary judgments about materiality levels.

b) 

The auditor’s allowable risk of assessing control risk is too high. 

c) The level of detection for the account.

d) 

The auditor’s allowable risk of assessing control risk is too low. 

 

d)  The auditor’s allowable risk of assessing control risk is too low.

16
As a result of sampling procedures applied as tests of controls, an auditor incorrectly assesses
control risk lower than appropriate. The most likely explanation for this situation is that

 
a) The deviation rates of both the auditor’s sample and the population exceed the tolerable rate. 

b) The deviation rates of both the auditor’s sample and the population is less than the tolerable
rate. 

c) The deviation rate in the auditor’s sample is less than the tolerable rate, but the deviation rate
in the population exceeds the tolerable rate. 
d) The deviation rate in the auditor’s sample exceeds the tolerable rate, but the deviation rate in
the population is less than the tolerable rate.

c) The deviation rate in the auditor’s sample is less than the tolerable rate, but the deviation rate
in the population exceeds the tolerable rate.

17
In performing tests of controls, the auditor will normally find that

 
a) The level of risk is directly proportionate to the rate of error. 

b) The rate of deviations in the sample exceeds the rate of error in the accounting records. 

c) The rate of error in the sample exceeds the rate of deviations. 

d) All unexamined items result in errors in the accounting records.