Chapter 15
Multiple-Choice Questions
1.easyA sample in which the characteristics of the sample are the same as those of the population isa(n): ba.variables sample. b.representative sample.c.attributes sample.d.random sample.2.easyWhen the auditor decides to select less than 100 percent of the population for testing, theauditor is said to use:aa.audit sampling. b.representative sampling.c.poor judgment.d.estimation sampling.3.In practice, auditors _________ know if a sample is truly a representative one.easya.sometimesdb.oftenc.routinelyd.never 4.To determine if a sample is truly representative, an auditor must:easya.conduct multiple samples of the same population.cb.never use sampling because of the expense involved.c.audit the entire population.d.use systematic sample selection.5.One of the ways to eliminate nonsampling risk is through:easya.proper supervision and instruction of the client’s employees. bb.proper supervision and instruction of the audit team.c.the use of attributes sampling rather than variables sampling.d.controls which ensure that the sample drawn is random and representative.6.One cause of nonsampling risk is:easya.ineffective use of audit procedures.ab.testing less than the entire population.c.use of extensive tests of controls.d.the possibility that a properly-selected sample still may not be representative.7.An auditor can increase the likelihood that a sample is representative by using care in:easyaDesigning the sampling processDesigning the sample selectiona.YesYes b.NoNoc.YesNod.NoYes8.easyWhen the auditor goes through a population and selects items for the sample without regard totheir size, source, or other distinguishing characteristics, it is called: ba.block sample selection. b.haphazard selection.c.systematic sample selection.
Arens/Elder/Beasley
d.statistical selection.9.When auditors wish to evaluate a sample statistically, the only acceptable selection method is:easya.probabilistic selection.ab.judgmental selection.c.haphazard selection.d.block sample selection.10.easyA sample in which every possible combination of items in the population has an equal chance of constituting the sample is a:aa.random sample. b.statistical sample.c.judgment sample.d.representative sample.11.easyThe process which requires the calculation of an interval and then selects the items based on thesize of the interval is:ca.statistical sampling. b.random sample selection.c.systematic sample selection.d.computerized sample selection.12.________ is the risk that audit tests will not uncover existing exceptions in a sample.easya.Sampling risk. bb.Nonsampling risk.c.Audit risk.d.Detection risk.13.easy ________ is the risk that an auditor will reach an incorrect conclusion because a sample is notrepresentative of the population.aa.Sampling risk b.Nonsampling risk c.Audit risk d.Detection risk 14.easyIn systematic sample selection, the population size is divided by the number of sample itemsdesired in order to determine the:aa.sampling interval. b.tolerable exception rate.c.computed upper exceptions rate.d.mean.15.Sampling risk may be controlled by:mediumcAdjusting the sample sizeAlways using random samplinga.YesYes b.NoNoc.YesNod.NoYes16.Which of the following occurrences would be least likely to attract the auditor’s attention?easya.Deviations from client’s established control procedures. bb.Deviations from client’s budgeted values.c.Monetary errors in populations of transaction data.d.Monetary errors in populations of account balance details.17.Which of the following statements is correct?
Arens/Elder/Beasley
easyda.A sample of all items of a population will eliminate sampling risk, but increasenonsampling risk. b.The use of an appropriate sample selection technique ensures a representative sample.c.The auditor’s failure to recognize an exception is a significant cause of sampling risk.d.The use of inappropriate audit procedures is a significant cause of nonsampling risk.18.easyThe risk which the auditor is willing to take in accepting a control as being effective when thetrue population exception rate is greater than a tolerable rate is the:ca.finite correction factor. b.tolerable exception rate.c.acceptable risk of assessing control risk too low.d.estimated population exception rate.19.easyThe exception rate the auditor will permit in the population and still be willing to reduce theassessed level of control risk is called the:aa.tolerable exception rate. b.estimated population exception rate.c.acceptable risk of overreliance.d.sample exception rate.20.easyIf the auditor decides to assess control risk at the maximum level in a private company audit,tests of controls are:ca.increased in number. b.reduced in number.c.not performed.d.unchanged from prior planned settings.21.Which of the following is
not
one of the basic phases in audit sampling?easya.Planning the sampledb.Evaluating the results of the samplec.Selecting the sample and performing the testsd.Each of the above is a phase in audit sampling.22.easyAttributes sampling would be an appropriate method to use on which one of the following procedures in an audit program?ca.Review sales transactions for large and unreasonable amounts. b.Observe whether the duties of the accounts receivable clerk are separate from handlingcash.c.Examine a sample of duplicate sales invoices for credit approval by the credit manager.d.Review the aged schedule of accounts receivable to determine if receivables from officersare included.
Arens/Elder/Beasley