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Auditing & Assurance 101 Practice Test: Audit Sampling for Tests of Details and Balances
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Audit sampling for tests of details of balances is a technique that auditors use to measure monetary misstatements. It involves selecting less than 100% of the items in a population for audit, and then applying audit procedures to the sample. The results from the sample are then used to estimate the population, and the auditor can use this information to issue opinions.  Auditors use audit sampling to: - Reduce the risk of assessed control - Determine if the exception rate in the population is low enough - Confirm that the control is working effectively for auditing internal control over... Show more
Auditing & Assurance 101 Practice Test: Audit Sampling for Tests of Details and Balances
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25 Questions

1. You are auditing Nelson and Company and determined that the sample results support a conclusion that the account is materially misstated, when in fact it was not misstated. This illustrates the risk of:
2. In monetary unit sampling, a sampling interval of 900 means that:
3. If an auditor concludes that internal controls are likely to be effective, the preliminary assessment of control risk can be reduced, leading to which of the following impacts on the acceptable risk of incorrect acceptance?
4. Which of the following is not a disadvantage of monetary-unit-sampling?
5. Use of the ratio estimation sampling technique to estimated dollar amounts is inappropriate when:
6. Tolerable misstatement is inversely related to sample size.
7. Difference estimation frequently results in smaller sample sizes than any other variables sampling method.
8. An important statistic to consider when using a statistical sampling audit plan is the population variability. The population variability is measured by the:
9. 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:
10. An auditor using nonstatistical sampling cannot formally measure sampling error.
11. The auditors principal objective when using a sample of tests of details of balances is whether the:
12. The word below that best explains the relationship between required sample size and the acceptable risk of incorrect acceptance is:
13. The statistical results when Monetary-Unit Sampling (MUS) is used are called exception bounds.
14. Why do auditors find MUS appealing?
15. The purpose of stratified sampling is to achieve a greater confidence level (lower risk of incorrect acceptance) for a given sample size.
16. The most commonly used method of statistical sampling for tests of details of balances is:
17. When selecting a sample size for substantive tests of balances which factor, other factors being equal, would result in a larger sample?
18. In difference estimation sampling, the confidence limits are calculated by combining the point estimate of the total misstatements and the computed precision interval at the desired confidence level.
19. Which balance-related audit objective cannot be assessed using monetary unit sampling?
20. The sample size is inversely related to the computed precision interval in difference estimation; that is, as sample size increases, the computed precision interval decreases.
21. Attributes sampling tables can be used to evaluate results of tests of details with Acceptable risk of assessing control risk too low (ARACR) being replaced with acceptable risk of incorrect acceptance (ARIA).
22. As the amount of misstatements expected in the population approaches tolerable misstatement, the planned sample size will:
23. Overstatement and understatement amounts are dealt with separately and then combined when generalizing from the sample to the population when applying monetary unit sampling (MUS).
24. The purpose of stratification is to permit auditors to emphasize certain aspects of a population and deemphasize others.
25. In estimating the population misstatement, the first step in projecting from the sample to the population is to:

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