Kayla Harbaugh
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Auditing Chapter 8 Homework

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Kayla Harbaugh
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Auditing Chapter 8 Homework

Auditing Chapter 8 Homework

Question 1 of 30

1

For which of the following audit procedures would sampling be most appropriate?

Select one of the following:

  • Inquiry

  • Confirmation

  • Analytics

  • Observation

Explanation

Question 2 of 30

1

Which one of the following is not a decision the auditor makes when using attributes sampling?

Select one of the following:

  • Whether to document all phases of the sampling process

  • Evaluation of sample information

  • Selection of items included in the sample

  • Sample size

Explanation

Question 3 of 30

1

Which one of the following is a decision the auditor makes when using attributes sampling?

Select one of the following:

  • The sampling unit

  • Period covered by testing

  • Completeness of the population

  • All of the above are auditor decisions

Explanation

Question 4 of 30

1

Which of the following describes sampling risk?

Select one of the following:

  • The sample size will be larger than needed.

  • The auditor incorrectly applies sampling methodology.

  • The population will not contain characteristics representative of the sample such that inferences made about that sample will be incorrect.

  • The sample will not contain characteristics representative of the population such that inferences made about that population will be incorrect.

Explanation

Question 5 of 30

1

Which of the following occurs when, based on sample results, control risk is assessed excessively high?

Select one of the following:

  • A less expensive audit

  • Errors that are more likely to occur than anticipated

  • Reduction of substantive testing

  • Audit inefficiency

Explanation

Question 6 of 30

1

Concluding that the book value of inventory is correct when it is materially misstated is an example of which of the following risks?

Select one of the following:

  • Incorrect rejection

  • Incorrect acceptance

  • Insufficient sample size

  • None of the above

Explanation

Question 7 of 30

1

When performing sampling, the auditor is most concerned with which of the following?

Select one of the following:

  • Risk of incorrect acceptance

  • Risk of excess sample size

  • Risk of errors in the population

  • Risk of incorrect rejection

Explanation

Question 8 of 30

1

While auditors may use either statistical or nonstatistical sampling, some auditors restrict the use of nonstatistical sampling for what reason?

Select one of the following:

  • It is less objective

  • It is less effective

  • It is less efficient

  • It is less risky

Explanation

Question 9 of 30

1

Which 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?

Select one of the following:

  • Allowable risk of assessing control risk too low

  • Allowance for sampling error

  • Tolerable failure rate

  • Expected failure rate

Explanation

Question 10 of 30

1

When performing attributes sampling, which of the following varies directly with the sample size?

Select one of the following:

  • The tolerable failure rate

  • The risk of over-reliance

  • The non-sampling risk

  • The expected failure rate

Explanation

Question 11 of 30

1

In analyzing misstatements using sampling techniques, the auditor should analyze the misstatements in what manners?

Select one of the following:

  • Absolutely and proportionately

  • Haphazardly and randomly

  • Methodically and systematically

  • Qualitatively and quantitatively

Explanation

Question 12 of 30

1

In testing account balances, haphazard sampling is an acceptable method of sampling provided the auditor believes the sample to be which of the following?

Select one of the following:

  • Statistically sound

  • Representative of the population

  • In the upper stratum

  • Representative of the sample

Explanation

Question 13 of 30

1

When determining sample size in attributes sampling, which of the following is usually true?

Select one of the following:

  • Tolerable misstatement amount is determined

  • Sampling risk will be too high

  • Population size is not a factor

  • A failure rate is not to be expected

Explanation

Question 14 of 30

1

Which of the following is a factor that the auditor should consider when choosing between nonstatistical and statistical sampling?

Select one of the following:

  • Whether the audit staff is adequately trained to use statistical sampling

  • Whether the population lends itself to use a random-based selection method

  • Whether the auditor wants a statistical measure of the risk of drawing a wrong conclusion

  • All of the above

Explanation

Question 15 of 30

1

When 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?

Select one of the following:

  • Stratified mean-per-unit sampling

  • Attribute sampling

  • Ratio estimation sampling

  • MUS sampling

Explanation

Question 16 of 30

1

The results of MUS sampling will be unacceptable when the total estimated misstatement exceeds which of the following?

Select one of the following:

  • The tolerable misstatement amount

  • The expected deviation rate

  • The tolerable error rate

  • The expected deviation amount

Explanation

Question 17 of 30

1

MUS is based on which of following?

Select one of the following:

  • Attributes sampling

  • Classical variables sampling

  • Expected error sampling

  • Population variability sampling

Explanation

Question 18 of 30

1

MUS is designed to test for which of the following?

Select one of the following:

  • Understatements

  • Either understatements or overstatements

  • Overstatements

  • Neither understatements or overstatements

Explanation

Question 19 of 30

1

When 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?

Select one of the following:

  • $16,000

  • $15,000

  • $10,000

  • $14,000

Explanation

Question 20 of 30

1

When planning a test of details using MUS sampling, tolerable misstatement is usually set at what level?

Select one of the following:

  • Lower than the expected error amount

  • Higher than performance materiality

  • Lower than performance materiality

  • Higher than the expected error amount

Explanation

Question 21 of 30

1

In MUS, what is meant by a sampling interval of 900?

Select one of the following:

  • Expected misstatement is 900

  • Every 900th dollar will be selected

  • Tolerable misstatement is 900

  • Every 900th item will be selected

Explanation

Question 22 of 30

1

Which one of the following is a proper course of action for the auditor when the total estimated misstatement exceeds the tolerable misstatement?

Select one of the following:

  • The auditor can ask the client to correct the known misstatements

  • The auditor will analyze the detected misstatements for some common problems

  • The auditor can expand the sample

  • All of the above

Explanation

Question 23 of 30

1

The auditor will do which of the following when the results of sample testing conclude that there is misstatement in excess of the tolerable misstatement?

Select one of the following:

  • Throw out the sample

  • Propose adjustments to the client

  • Issue a disclaimer of opinion

  • Disclose the misstatement in the client's financial statements

Explanation

Question 24 of 30

1

In attributes sampling, which of the following does the risk of incorrect acceptance deal with?

Select one of the following:

  • Effectiveness

  • Efficiency

  • Reliability

  • Both A and B

Explanation

Question 25 of 30

1

In attributes sampling, the risk of incorrect rejection deals with which of the following?

Select one of the following:

  • Effectiveness

  • Efficiency

  • Reliability

  • Both A and B

Explanation

Question 26 of 30

1

Which of the following is a factor of nonsampling risk?

Select one of the following:

  • Using non statistical sampling

  • Using a random sample selection

  • Having a sample which does not represent the population

  • Not carrying out the appropriate audit procedure

Explanation

Question 27 of 30

1

In selecting a sample for attributes testing, haphazard selection involves which of the following approaches?

Select one of the following:

  • An arbitrary selection with no conscious bias

  • Every nth item being selected after a random start

  • Selecting all items on a day or week

  • Each item in the population having an equal chance of selection

Explanation

Question 28 of 30

1

In selecting a sample for attributes testing, block sampling involves which of the following approaches?

Select one of the following:

  • An arbitrary selection with no conscious bias

  • Every nth item being selected after a random start

  • Selecting all items on a day or week

  • Each item in the population having an equal chance of selection

Explanation

Question 29 of 30

1

Which of the following tasks is not performed by data analytics tools?

Select one of the following:

  • Footing a file

  • Obtaining file statistics

  • Checking for gaps in processing sequences

  • Preparing custom reports

  • All of the above tasks can be performed using data analytics tools

Explanation

Question 30 of 30

1

Which of the following data analytics tools might an auditor use to test the completeness assertion for sales?

Select one of the following:

  • Analyze data to assess the proper operation of sales cutoff tests around year-end

  • Age accounts receivable

  • use data visualization tools to evaluate disclosures about sales and profitability

  • All of the above

Explanation

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