Chapter 17 - Chapter 17 Multiple-Choice Questions 1. easy c...

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Chapter 17 Multiple-Choice Questions 1. Sampling used for tests of details provides results in terms of: easy a. exception rates. c b. percentages. c. dollars. d. expectation rates. 2. Both sampling and nonsampling risks are associated with: Easy d Tests of controls. Substantive tests of transactions. a. Yes Yes b. No No c. Yes No d. No Yes 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. must be expressed in percentages. 4. Monetary-unit sampling is most commonly used when: easy a. several exceptions are expected. d b. a dollar result is desired. c. the population data are maintained on manual files. d. the auditor is searching for understatements only. 5. Monetary-unit sampling is not particularly effective at detecting: easy a. overstatements. b b. understatements. c. errors in current assets. d. errors in noncurrent assets. 6. Tests for rates of occurrence are appropriately used in all but which of the following situations? Easy c Testing of internal controls Substantive testing of transactions Substantive testing of details of balances a. Yes Yes Yes b. No Yes Yes c. Yes Yes No d. No No Yes 7. 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. 8. Which of the following is not a term relevant to sampling for tests of details? easy a. Acceptable risk of incorrect rejection Arens/Elder/Beasley
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d b. Analysis of misstatements c. Estimate misstatements in the population d. Define the exception conditions Arens/Elder/Beasley
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9. When auditors sample for tests of details of balances, the objective is to determine whether the: easy a. account balance being audited is fairly stated. a b. transactions being audited are free of misstatements. c. controls being tested are operating effectively. d. transactions and account balances being audited are fairly stated. 10. 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 Nonstatistical sampling. Monetary-unit sampling. a. Yes Yes b. No No c. Yes No d. No Yes 11. What is the purpose of applying stratified sampling to a population? Easy d To avoid items that may contain misstatements To emphasize certain items and deemphasize others a. Yes Yes b. No No c. Yes No d. No Yes 12. 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.
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This note was uploaded on 08/27/2011 for the course AC555 AC555 taught by Professor Tarbet during the Spring '10 term at Keller Graduate School of Management.

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Chapter 17 - Chapter 17 Multiple-Choice Questions 1. easy c...

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