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Exam 19: Variables Sampling

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Question 51

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Using an incremental confidence factor of 1.58 (corresponding to the risk of incorrect acceptance of 10%) ,what is the incremental allowance for sampling risk?

A) $5,000
B) $7,900
C) $8,700
D) $23,700

E) A) and B)
F) A) and C)

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Question 52

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Indicate whether each of the following factors is considered in determining sample size in monetary unit sampling (M),classical variables sampling (C),both (B),or neither (N). ____ 1.Population size. ____ 2.Standard deviation. ____ 3.Risk of incorrect acceptance. ____ 4.Expected misstatement. ____ 5.Tolerable misstatement. ____ 6.Risk of incorrect rejection. ____ 7.Tainting percentage.

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1.B; 2.C; ...

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Question 53

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In which of the following circumstances would the auditor most likely use variables sampling?

The amount at which an item would be recorded assuming no mistakes in judgment or incorrect applications of generally accepted accounting principles were made is the

Which of the following components of the upper limit on misstatements is based on the possibility that the sampling interval contains a greater degree of misstatement than the item examined by the auditor?

A client's inventory is recorded at $600,000 and is comprised of 1,000 items.The auditors examined a sample of items with a recorded balance of $100,000 and determined an audited value of $90,000.What is the estimated audited value for inventory?

Which of the following is not true with respect to the risk of incorrect acceptance?

Which of the following components of the upper limit on misstatements is affected by misstatements detected during the audit examination?

An auditor may decide to increase the risk of incorrect rejection when

Which of the following is not an advantage associated with monetary unit sampling (MUS) ?

Zimmerman is auditing a client's accounts balance recorded at $1 million using monetary unit sampling.After assessing the appropriate parameters,Zimmerman determined an appropriate sample size of 100 items.The following two misstatements were identified as a result of the substantive tests: Assume that Zimmerman's parameters included a tolerable misstatement of $60,000 and a risk of incorrect acceptance of 5%.(Confidence factors for a 5% risk of incorrect acceptance are shown below) : Which of the following is not true with respect to the above?

Jeter,CPA,performed a nonstatistical sampling plan to examine the inventory balances of Big Apple Company and estimated the account balance based on the ratio of audited value to recorded balances.He audited 200 items from a sample and found an audited value of $36,000.The sample had a recorded value of $40,000.If the entire inventory contained 3,000 items and the total recorded value of the inventory was $500,000,the estimated account balance using nonstatistical estimation and projecting the error based on number of items examined is

In a classical variables sampling application,if the _____ exceeds the maximum difference between the recorded balance and any point within the precision interval,the auditor would decide to _____ the account balance as fairly stated.

The amount by which a projected misstatement in an account balance or class of transactions differs from an actual misstatement as a result of the sample not being representative of the population would typically arise from

What is the auditor's normal course of action if a "logical unit" is selected twice in monetary unit sampling?

Which of the following is not true with respect to the effect of the population standard deviation in a classical variables sampling application?

The audit team is using monetary unit sampling to examine an entity's accounts receivable balance,which is recorded at $500,000.The team has determined the tolerable misstatement to be $25,000,the risk of incorrect acceptance to be 5 percent,and the expected misstatement to be 2 percent.Using the monetary unit sampling Sample Size table,what is the appropriate sample size?

Cruz,CPA decided to use nonstatistical sampling to examine the accounts payable balances of Maverick Inc.,Based on his professional judgment,Cruz judgmentally selected sample invoices from a file,but did so without any intentional bias.The selection method used by Cruz was

The total amount of misstatement identified in a sample is referred to as the

Which of the following factors has a direct relationship with sample size in a variables sampling application?