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Auditing & Assurance 101 Practice Test: Audit Sampling for Tests of Details and Balances
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Avg score: 13% • Most missed: “Your audit sampling program states:”
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. An auditor using nonstatistical sampling cannot formally measure sampling error.
2. Why do auditors find MUS appealing?
3. The auditors principal objective when using a sample of tests of details of balances is whether the:
4. Which balance-related audit objective cannot be assessed using monetary unit sampling?
5. The use of monetary-unit sampling is most appropriate when the auditor expects to find many errors and when a monetary result is desired.
6. Which of the following is not a type of statistical method that provides results in dollar terms?
7. Stratified sampling is applicable to difference, mean-per-unit, and ratio estimation, but it is most commonly used with:
8. 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?
9. Use of the ratio estimation sampling technique to estimated dollar amounts is inappropriate when:
10. The risk of incorrect rejection is important only when there is a ________ cost to increasing the sample size.
11. 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.
12. Your audit sampling program states: the upper misstatement limit is $13,200 and the risk of incorrect acceptance is at the 95% confidence level. This means:
13. 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:
14. Acceptable audit risk (AAR) and acceptable risk of incorrect acceptance (ARIA) are inversely related; that is, as AAR increases, ARIA decreases.
15. In monetary-unit sampling, the likelihood of high dollar items from the population being included in the sample is lower than the likelihood for small dollar items.
16. Estimated misstatement in the population and sample size are inversely related; that is, as estimated misstatement increases, sample size decreases.
17. The two primary types of sampling methods used for calculating dollar misstatements are attribute sampling and monetary unit sampling.
18. The client's trial balance has a balance of $410,000 for merchandise inventory. As the auditor you are willing to accept a balance that is within $20,000 of either side of the recorded balance. You compute a 95% confidence interval of $395,000 to $425,000. You could therefore:
19. What is the primary objective of using stratified sampling in auditing?
20. Acceptable risk of incorrect acceptance (ARIA) is directly related to the computed precision interval in difference estimation; that is, as ARIA increases, the computed precision interval decreases.
21. The most commonly used method of statistical sampling for tests of details of balances is:
22. In evaluating sample results for tests of details, auditors must evaluate exceptions identified by the performance of audit procedures.
23. Which of the following is not a problem with monetary-unit selection?
24. When errors are found in a sample, auditors in practice generally make the assumption:
25. If an auditor desires a greater level of assurance in auditing a balance, the acceptable risk of incorrect acceptance:

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