eee . Audit Objectives, Procedures, Evidences and Documentation procedural deviations in the population were within an acceptable range. b. monetary precision is in excess of a certain pre-determined amount. c. the population isnot in error by more than a fixed amount. |. population characteristics occur at least once i in the population. 561. In performing a review of his client's cash disbursements, a CPA - uses systematic sampling with a random start. The primary ) disadvantage of systematic sampling is that Population items a. must be recorded ina systematic pattern before the sample can be drawn. May occur in a systematic pattern, thus negating the | randomness of the sample. May occur twice in the sample. - Must be replaced in the population after sampling to permit valid statistical inference. ‘ b. ° 562. The Purpose of tests fo: assurance that the acco 4S prescribed. The sami for compliance is a. judgment sampling. attribute sampling. Unrestricted random sampling with replacement. Stratified random sampling. r compliance is to provide reasonable unting control procedures are being applied pling method that is most useful when testing b, ic d 5 8. An example of sam; pling for attributes would be estimating the a Quantity of specific inventory items. Probability of losing a patent infringement case. Percentage of overdue accounts receivable. b, C 4. peso value of accounts receivable. W-151Unit IV. 564. Which of the following best describes what the auditor means by the rate of occurrence in the attribute sampling plan? a. The number of errors that can reasonably be expected to be found in a population. b. The frequency with which a certain characteristic occurs within a population. c. The degree of confidence that the sample is representative of the population. d. The peso range within which the true population total can be expected to fall. 565. When performing a compliance test with respect to control over cash disbursements, a CPA may use a systematic sampling technique with a start at any randomly selected item. The biggest disadvantage of this type of sampling is that the items in the population a. must be recorded in a systematic pattern before the sample / can be drawn. b. ‘may occur in a systematic pattern, thus destroying the sample randomness. i: May systematically occur more than once in the sample. d._ must be systematically replaced in the population after sampling. 566. Which of the following statistical selection techniques is least desirable for use by an auditor? a. Systematic selection. b. Stratified selection, c. Block selection. d. Sequential selection, igthat 567. An advantage of using statistical sarnpling techniques !° c techniques a. mathematically measure risk. b. eliminate the need for judgmental decisions: : W152Audit Objectives, Procedures, Evidences and Documentation c. define the values of precision and reliability required to provide audit satisfaction, d, have been established in the courts to be superior to. judgmental sampling. 568, Which of the following best illustrates the concept of sampling risk? a. Arandomly chosen sample may not be representative of the population as a whole on the characteristics of interest. b. An auditor may select audit procedures that are not appropriate to achieve the specific objective. c. Anauditor may fail to recognize errors in the documents examined for the chosen sample. _ d. The documents related to the chosen sample may not be available for inspection. 569, Statistical sampling generally may be applied to test compliance With internal accounting control when the client's internal accounting Control procedures : a. depend primarily on appropriate segregation of duties. b. are carefully.reduced to writing and are included in client accounting manuals. ©. ‘leave an audit trail in the form of documenta! compliance. : 4. enable the detection of material irregularities in accounting records. ry evidence of the "he estimated error rate obtained from attribute sampling is St Useful in satisfying the auditing standard which states : the work is to be adequately planned, and assistants, if any, 2'e to properly supervised. * Sufficient competent evidentia through inspection, observation, inquiri © afford a reasonable basis for an opinion. | matter is to be obtained inquiries, and confirmations Iv-153Unit IV. c. the examination is to be performed by a person or Persons having adequate technical training and proficiency as an auditor. d. there is to be a proper study and evaluation of the existing internal control as a basis for reliance thereon and for the determination of its resultant extent of the tests to which auditing procedures are to be restricted. 571. The tolerable rate of deviations for a compliance test is generally a. lower than the expected rate of errors in the related accounting records. b. higher than the expected rate of errors in the related accounting records. c. identical to the expected rate of errors in the related accounting records. d. unrelated to the expected rate of errors in the related accounting records. 572. If certain forms are not consecutively numbered a. selection of a random sample probably is not possible. b. systematic sampling may be appropriate. ¢. stratified sampling should be used. d. random number tables can not be used. 573. When using a statistical sampling plan, the auditor would probably require a smaller sample if the a. population increases. b. desired precision interval Narrows. c. desired reliability decreases, d. expected error occurrence rate increases. 574. Which of the following is not a type of statistical method that Provides results in dollar terms? a. attribute sampling, b. peso-unit sampling. IV-154Audit Objectives, Procedures, Evidences and Documentation ©. variables sampling. 4. sampling with probability proportional to size, 575. When auditors sample for tests of d is to determine whether the account a. is correct. b. contains material errors, c. is fairly stated. d. is material in comparison to Operating income. letails of balances, the objective balance 576. A method in sampling in which divided into two or more sub-po| a. variables sampling. b. attributes sampling. ©. stratified sampling. d. divisible sampling. all the items in the population are pulation is 577. When selecting a stratified sample, the sample size is a. determined for the un-stratified population and then apportioned to each stratum. . determined for each stratum and selected from that stratum. » determined for each stratum and selected randomly from the entire un-stratified population. |. always larger than if un-stratified sampling had been used. 78, An inherent part of the sampling that results from testing less than entire population is 3. the acceptable risks of over-reliance. * Sampling risks. * the upper bound. "inherent risks, 3, : Sstimated total population error is calculated as b ; © Point estimate plus the sampling error. © Point estimate minus the sampling error. IV-155Unit IV. c. the sampling error minus the point estimate. d. ‘none of the above. the audit results is the decisiny "580. The final step in the evaluation of ly stated or to require further a. accept the population as fairl action. b. determine sampling error and ci population error. c. project the point estimate. d. determine the error in each sample. alculate the estimated totd elatively recent innovation in sampling methodology that was 581. Ar use by auditors is developed specifically for a. attributes sampling. b.. variables sampling. c. peso-unit sampling. d. discovery sampling. 582. The most commonly used method of statistical sampling fort details of balances is a. attributes sampling. b. variables sampling. c. peso-unit sampling. d. discovery sampling. ing a palare ke of accept ae al to or 6° 583. The risk the auditor is willing t : e balance IS equi correct when the true error in thi the tolerable misstatement is a. theupper bound. b. the tolerable risk. c. the acceptable risk 0 d. the lower bound. f incorrect acceptanceear'e decici i a c eaten acceptable risk of incorrect acceptance is ; b. Audit risk. c. Detection risk, d. Inherent risk, 585. In the application of Statistical t amounts, a preliminary sample is purpose of estimating population ‘echnique to the estimation of peso usually taken Primarily for the a. Variability . b. Mode c. Range d. Median 586. The method used to measure the estimated total error amount ina Population when there is both a recorded value end an audited value for each item in the sample is a. difference estimation. b. mean-per-unit estimation. G ratio estimation. d. peso-unit sampling. 587, The variables sampling method which gene .lly results in smaller Sample sizes than any other method is a.’ difference estimation. b. ‘mean-per-unit estimation ¢. ‘ratio estimation. d. peso-unit sampling. 588. if the size of the errors in population is proportionate to the recorded value of the population items, smaller sample sizes will be 8enerated using : a. difference estimation. b. mean-per-unit estimation, 1V-157 Nec. ratio estimation. d. peso-unit sampling. 589. The auditor is concerned with the audited value rather than the error amount of each item in the sample when using a. difference estimation. b. mean-per-unit estimation. c. ratio estimation. d. peso-unit sampling. 590. The average audited value of items in the sample multiplied times | the population size is a. computed precision interval. b. point estimate. ¢. recorded book value. d. upper confidence limit. 591. Stratification is applicable to difference, mean-per-unit, andro estimation, but it is most commonly used with a. difference estimation. b. mean-per-unit estimation. ¢. ratio estimation. d. discovery sampling. 4 st the 592. While performing a substantive test of details during auditor determined that the sample results SuPPOT ag, iva that the recorded account balance was materially oe pe in fact, not materially misstated. This situation " lus a. incorrect rejection. b. incorrect acceptance. C. assessing control risk too low. d. assessing control risk too high. Iv-158Audit Objectives, Procedures, Evidences and Documentation 593. Which of the following would be designed to estimate a numerical measurement of a population, such as a peso value? a. Sampling for variables. b. Sampling for attributes. c. Discovery sampling. d. Numerical sampling. 594. 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. ¢. constants and attributes. d. constants and variables. 595. Tolerable error is a statistical measure of the maximum likely difference between the sample estimate and the true but unknown population total, and is directly related to a. reliability of evidence. b. relative risk. | c.. materiality. | d. cost benefit analysis. statistical sampling ler when using a nplit ation variability is 596. An i fn i : import tatistic to consi portant sta’ ‘silty ae popul audit plan is the population varia Measured by the @. sample mean. b. standard deviation. nen ©. standard error of the sample M*"™ tation. 4. estimated population total minus the actual popu : Iv-159Unit IV 597. Increases in the tolerable misstatement has what effect on the planned allowance for sampling risk? a. Increases. b. Decreases. c. No effect. d. Indeterminate. 598. Which of the following is not generally used for selecting samples? a. Random number tables. b. Random number generators. c. Physical representation numbers. d. Systematic selection. 599. In performing a test of a control last year the auditors specified a tolerable deviation rate of X percent. This year the auditors have specified a tolerable rate of less than X percent. Assuming that all other factors remain the same, which of the following is true regarding the relationship between this year's sample size compared to last year's sample size? a. This year's sample is larger than last year's sample. b. This year's sample is smaller than last year's sample. c. This year's sample is equal to last year's sample. . d. This year's sample is indeterminate in relation to last year's sample. 600. The auditor using non-statistical attributes sampling, but who 4 nevertheless has chosen the sample in conformity with random selection procedures: a. Need not consider the risk of assessing control risk to° ke b. Had committed a nonsampling error. c. Will have to use discovery sampling techniques to © the results, d. Should compare the deviation rate of the sample tothe tolerable rate, »yaluate IV-160courses eaceca sacaeo eee as eee an ecoaac 36. 37. 38. 39. 40. 41. 42. 43. 45, 46. 47. 48. 49. 50. 31, 52. 53. 34. 55. 56. 37. 58. 59, 6i. 62, 63, 65. 66, 67, 68. 69, 70. caanag enoneneaeoaeaaansa aceon arene caso 102. 103. 104. 105. aovats astoaoe aeanrag nn aagn atranra seoaeaen anane 110. 1. 112. 113. 114, 115. 116. 117. 118. 119. 120. 121. 122. 123. 124, 125. 126. 127. 128. 129. 130. 131. 132. 133. 134. 135. 136. 137. 138. 139. 140. Iv-161 aeate eatara nnn ea anoneg aeaeoece aenaanUnit IV ‘Answer Key to Unit IV - continued 2a 246. d 281. 212. d 241. b 282. 213. ¢ 248. c 283. 214. ¢ 249. d 284. 215. ¢ 250. d 285. 216. 0 251.4 286. 21d 252. b 287. 218. & 253. d 288. 219.0 254. d 289. 220. a 255. ¢ 290. lc 256. a 291. 22.0 257.0 292. 223. d 258.0 293. 224. 0 259. d 294. 225. ¢ 260. 0 295. 226. ¢ 261. ¢ 296. 227. b 262. b 297. 228. ¢ 263. d 298. 229. ¢ 264. d 299. 230. b 265. d 300. 21d 266. d 301. 232. d 267. @ 302. 233. ¢ 268. b 303. 234. b 269. a 304. 235. b 270. d 305. 236.0 anc 306. 237. ¢ 272. b 307. 238. b 273.0 308. 239. b 274. 0 309. 240. 0 275. d 310. Al. c 216. b 3uL. 242. ¢ 271.0 312. 243. d 218. d 313. AA. ¢ 219. d 314. 245.0 280. b 315. d a 6 b b b b c c a 316. 317. 318. 319. 320. 321. 322, 323. 324, 325. 326. 321. 328. 329. 330. 331. 332. 333. 334. 335. 336. 337. 338, 339. 340. 341. 342. 343, 344, 345. 346. 347. 348. 349. 350. 1V-162 eooae ccc ses seo 5 eeoaaacneo oearo neran 351. 352. 353. 354. 355. 356. 357. 358. 359. 360, 361. 362. 363. 364. 365. 366. 367. 368. 309. 370. 3. 372. 373. 374. 375. 316. 377. 378. 379. 380. 381. 382. 383. 384. 385. naoaancaes aaans neo ee nr acan aoece assaf 386. 0 387. d 388..c 389. 390. ¢ 391. b 392.0 393.0 394.¢ 395.b 396.4 397.0 398.6 399. d 400. d 401.0 402. b 403. ¢ 404. b 405. 406. 407.b 408.5 409. ¢ 410. ¢ ab 412.@ 413.6 415.4 416.6 alto 418.2 419.0 420.=e << Audit Objectives, Procedures, Evi mentation lit Objectives, dures, Evidences and Docur Key tO unit ¥- continued 456. b 491. b 1.0 526. a o a a : ee a 521. b a : 586. d 43. & . 93. ¢ 528, ¢ . b 597. @ ub 459. ¢ 494c (529.6 563. ¢ ra 5.0 460. 2 Msc 530c ay 599. @ oe 461. ¢ 406.0 S3ld as and me 462. 4 497. d 532. 0 et phe 463. ¢ 498. 533. ¢ car 9.4 464. 0 499. 534. bec 0c 465. 300.¢ 535. 6 510. 4 pio 466. ¢ 501. d 7 | 432. 0 467. 4 502. b i] 572. b ag3.d 468. 4 303. 0 7 373. ¢ hc 469.02, 504.5 b 574.0 435.0 470. ¢ 505. © . b 575. ¢ 86. ani. ¢ 506. b ve 516. ¢ a1. 472. ¢ 507. d . 577. b 438. 0 473. 4 508. b . 578. b 49. 4 474. c 509. 4 . 579. 0 M0. ¢ 475. b 510. ¢ 7) 580. 0 Md 476. ¢ 51. ¢ . 581. ¢ M26 477. b 512. d .d 582. ¢ we 478.0 513.2 . b ae ‘ .a 479.0 514. d . b h 5.0 480. 0 515. ¢ 0 ee i ae 516.6 a ae ae 482. a 517.0 ‘ 388. ¢ a. 483. b 518. 4 359. > 450. ¢ 484. b 519. ¢ eg : 590. 6 : 485. ¢ 520. 9 . 1g b sal. > 492, g 486. b 521. ¢ 3 592. 4 435 487. b 522. b 7 593. 9 454g 488. b 523. a 7 594. 455, 489. 524, b Eh 595. 9 | 490. d 525. ¢ he 1v-163