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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. The method used to measure the estimated total error amount in a population when there is both a recorded value and an audited value for each item in the sample is:
2. The major reason that the difference and ratio estimation methods would be expected to produce audit efficiency is that the:
3. The two primary types of sampling methods used for calculating dollar misstatements are attribute sampling and monetary unit sampling.
4. Difference estimation frequently results in smaller sample sizes than any other variables sampling method.
5. The primary factor affecting the auditor's acceptable risk of incorrect acceptance is assessed as inherent risk when quantifying audit risk.
6. 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:
7. Why do auditors find MUS appealing?
8. Stratified sampling is applicable to difference, mean-per-unit, and ratio estimation, but it is most commonly used with:
9. Which of the following is not a type of statistical method that provides results in dollar terms?
10. An auditor using nonstatistical sampling cannot formally measure sampling error.
11. The statistical results when Monetary-Unit Sampling (MUS) is used are called exception bounds.
12. In evaluating sample results for tests of details, auditors must evaluate exceptions identified by the performance of audit procedures.
13. 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?
14. Tolerable misstatement is inversely related to sample size.
15. In monetary-unit sampling, the relationship between tolerable misstatement size and required sample size is:
16. Acceptable risk of assessing control risk too low (ARACR) and acceptable risk of incorrect acceptance (ARIA) are inversely related; that is, a decrease in ARACR is accompanied by an increase in ARIA.
17. You are auditing Raji and Company. You discover an item of inventory with an audited value of $5,000 with a recorded amount of $3,000. If this is the only error you discover the projected misstatement for the sample would be:
18. The purpose of stratification is to permit auditors to emphasize certain aspects of a population and deemphasize others.
19. The risk of incorrect rejection is important only when there is a ________ cost to increasing the sample size.
20. The most commonly used method of statistical sampling for tests of details of balances is:
21. 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:
22. An important statistic to consider when using a statistical sampling audit plan is the population variability. The population variability is measured by the:
23. The purpose of stratified sampling is to achieve a greater confidence level (lower risk of incorrect acceptance) for a given sample size.
24. When errors are found in a sample, auditors in practice generally make the assumption:
25. The final step in the evaluation of the audit results is the decision to:

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