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Unformatted text preview: CHAPTER 17 Multiple-Choice Questions 1. easy When monetary-unit sampling has been concluded and the population is not considered acceptable, which one of the following courses of action would not be appropriate? B a. Increase the sample size to see if this may satisfy the auditors tolerable misstatement requirements. b. Increase the tolerable misstatement amounts so that the error bounds are acceptable. c. Request the client to correct the population. d. Refuse to give an unqualified opinion. 2. Both sampling and nonsampling risks are associated with easy a. tests of controls. d b. substantive tests of transactions. c. tests of details of balances. d. all of the above. 3. Tolerable misstatements for overstatements and understatements easy a. may be different amounts. a b. must be different amounts. c. must be set at the same amount. d. will be determined by the statistical tables. 4. Monetary-unit sampling is most commonly used when easy a. zero or few exceptions are expected. d b. a dollar result is desired. c. the population data are maintained on computer files. d. all of the above. 5. Tests for rates of occurrence are appropriately used in all but which of the following situations? easy a. Testing of internal controls. c b. Substantive testing of transactions. c. Substantive testing of details of balances. d. Tests for rates of occurrence are appropriate for all of the above. 6. Which of the following is not a type of statistical method that provides results in dollar terms? easy a. Variables sampling. b b. Attributes sampling. c. Monetary-unit sampling. d. Sampling with probability proportional to size. 7. When auditors sample for tests of details of balances, the objective is to determine easy a. whether the account balance being audited is fairly stated. a b. whether the transactions being audited are free of misstatements. c. whether the controls being tested are operating effectively. d. whether the transactions and account balances being audited are fairly stated. 8. easy The auditor must consider the possibility that the true population misstatement is greater than the amount of misstatement that is tolerable when the auditor is performing d a. statistical sampling. b. nonstatistical sampling. c. monetary-unit sampling. d. all of the above. 9. What is the purpose of stratification as used in applying stratified sampling to a population? easy a. To avoid items that may contain misstatements. b b. To emphasize certain items and deemphasize others. 17-1 c. Either a or b. d. Neither a nor b. 10. medium If an auditor desires a greater level of assurance in auditing a balance, the acceptable risk of incorrect acceptance a a. is reduced. b. is increased....
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This note was uploaded on 03/18/2011 for the course ACCT 422 taught by Professor Smith during the Spring '11 term at UMBC.
- Spring '11