Use of the ratio estimation sampling technique to estimate dollar amounts is inappropriate when:

ACCP301- Auditing and Assurance Principles

Practice Exercises-Audit Sampling 1st Semester, SY2020-2021

True / False Questions. Underline your answer. If your answer is false, provide a short

justification based on the correct concept or auditing standard applicable to the

statement. Write it on the space provided below each item statement.

1. Stratification of the population generally results in a more efficient sampling plan.

True False

2. Discovery sampling is equivalent to an attributes sampling plan with a specified expected

deviation rate of 0 percent.

True False

3. Increases in the number of deviations in an attributes sample results in an increase in the

achieved upper deviation rate of the attributes sample.

True False

4. The definition of a "deviation" for a test of a control should include only those deviations

that result in misstatements in the financial statements.

True False

5. Statistical sampling cannot be used to test all control activities.

True False

6. Using ratio and difference estimation for a sample is an example of a dual purpose test.

True False

7. Increases in the tolerable misstatement result in a decreased sample size when using mean-

per-unit estimation.

True False

8. The mean book value of the items included in a mean-per-unit sample is not directly used

in the evaluation of sample results.

True False

9. When evaluating the results of a variables sampling plan, the projected misstatement is

calculated and compared to the tolerable misstatement.

True False

10. Auditors project the misstatements found in the sample to the population when using

statistical sampling, but not when using nonstatistical sampling.

True False

Use of the ratio estimation sampling technique to estimate dollar amounts is inappropriate when
A. A book value for each sample item is unknown.

B. There are some observed differences between audited values and book values.

C. The total book value is known and corresponds to the sum of all the individual book values.

D. The audited values are nearly proportional to the book values.

79.Use of the ratio estimation sampling technique toestimate dollar amounts is inappropriate when:

We have textbook solutions for you!

The document you are viewing contains questions related to this textbook.

Financial and Managerial Accounting Using Excel for Success

Reeve/Warren

Expert Verified

A.The total bocorrespondbook valueB.A book value for each sample item is unknown.C.There are some observed differences between auditedD.The audited values are nearly proportional to the book vAACSB: AnalyticAACSB: TechnologyAICPA BB: IndustryAICPA BB: Leveraging TechnologyAICPA FN: Leveraging TechnologyAICPA FN: MeasurementBlooms: UnderstandDifficulty: 2 MediumLearning Objective: 09-07 Describe the difference and ratio methods of estimation.Source: AICPATopic: Classical Variables SamplingWhittington - Chapter 09 #7980.Auditors have a variety of sampling approachesavailable. For each approach in the first column,identify the correct statement in the secondcolumn. Each statement may be used once, morethan once, or not at all.1. Attributes samplingThe most frequentlyused general methodthat arrives at anestimated deviationrate.12. DifferenceestimationsamplingA classical method that usesaudited and book values of items in thto obtain an estimated total audite3. Ratio estimationsamplingA method that is most ecircumstances in which auditors expelow rate of occurrence of somdeviation (e.g., a fraudu4. Mean-per-unitestimationsamplingA method that defines the samplineach individu5. DiscoverysamplingA classical method that usesaudited values of items in the samplbook values) to obtain an estim6. Probability-proportional-to-sizesamplingA classical method that usesaudited and book values of items in thto obtain an estimated total auditeAACSB: AnalyticAACSB: TechnologyAICPA BB: IndustryAICPA BB: Leveraging TechnologyAICPA FN: Decision Making

AICPA FN: Leveraging TechnologyBlooms: UnderstandDifficulty: 2 MediumLearning Objective: 09-03 Understand the different types of sampling plans used in auditing.Topic: Statistical and Nonstatistical SamplingWhittington - Chapter 09 #8081.Audit sampling is used in conjunction with many audit tests, and may be performed on astatistical or nonstatistical basis.a. Define the term audit sampling.b. List and explain two advantages of the use of statistical sampling as compared tononstatistical sampling.a. Audit sampling is performing a test on less than 100 percent of an audit population to makea conclusion about a characteristic of the population.b. Statistical sampling may assist the auditors in (only two required):• Designing efficient samples.• Measuring the sufficiency of the evidence obtained.• Objectively evaluating sample results (measuring sampling risk).AACSB: AnalyticAACSB: TechnologyAICPA BB: IndustryAICPA BB: Leveraging TechnologyAICPA FN: Decision MakingAICPA FN: Leveraging TechnologyBlooms: UnderstandDifficulty: 2 MediumLearning Objective: 09-01 Distinguish between statistical and nonstatistical sampling.

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 62 pages?

Upload your study docs or become a

Course Hero member to access this document

We have textbook solutions for you!

The document you are viewing contains questions related to this textbook.

The document you are viewing contains questions related to this textbook.

Financial and Managerial Accounting Using Excel for Success

Reeve/Warren

Expert Verified

What effect does decreasing the risk of incorrect acceptance have on sample size?

Which of the following is not generally used for selecting samples?

What is the estimated total audited value using difference estimation?

Which of the following statistical sampling techniques involves taking samples in a series of stages?