Mod GStudent: ___________________________________________________________________________1.Variables sampling is used primarily when the auditor uses analytical procedures. True False2.Classical variables sampling methods are unique in that they define the population as a number of dollars in an account balance or class of transactions. True False3.A significant advantage of monetary unit sampling (MUS) is that it typically results in relatively small sample sizes. True False4.Both the expected error and tolerable misstatement have direct relationships with sample size. True False5.In a monetary unit sampling (MUS) application, the auditor has a higher level of concern with the risk of incorrect acceptance than the risk of incorrect rejection. True False6.The risk of incorrect rejection typically results in an efficiency loss for the auditor. True False7.The level of tolerable misstatement assessed by the auditor is based on the recorded balance of the account balance or class of transactions as well as the relationship of the account balance to important financial statement subtotals. True False8.In a first-year engagement, auditors cannot estimate the expected error because they have no prior historical relationship with the client. True False9.Monetary unit samples are selected using a form of systematic random selection. True False10.One logical unit can account for more than one sample selection in a monetary unit sampling (MUS) application. True False11.The tainting percentage is determined by dividing the recorded amount of the sample item by the sampling interval. True False12.The projected misstatement assumes that the sampling interval contains a slightly higher percentage of misstatement than the sample item. True False13.The basic allowance for sampling risk should only be calculated if the auditor identifies a misstatement. True False14.If the upper limit on misstatement is less than or equal to the tolerable misstatement, the auditor would conclude that the account balance or class of transactions is fairly recorded. True False
15.If the upper limit on misstatement exceeds the tolerable misstatement, the auditor could not initially conclude that the account balance is fairly recorded. True False16.Stratifying the sample allows the auditor to reduce the overall sample size required in a classical variables sampling application. True False17.The standard deviation has an inverse relationship with sample size in a classical variables sampling application. True False18.In a classical variables sampling application, the precision interval has a (1 minus the risk of incorrect acceptance) probability of including the true population value. True False19.If the auditor's estimate of the recorded amount of the account balance falls within the precision interval, the auditor will decide to accept the account balance as fairly recorded.
- Spring '12
- account balance, tolerable misstatement, incorrect acceptance