SOLVED

Learning Objective 15-6 1) Rodgers CPA believes that the rate of client billing errors is 4% and has established a tolerable deviation rate of 6%. In auditing client invoices Rodgers should use: A) stratified sampling. B) classical sampling. C) proportional sampling. D) attributes sampling. 2) Attributes sampling would be an appropriate method to use on which one of the following procedures in an audit program? A) Review sales transactions for large and unreasonable amounts. B) Observe whether the duties of the accounts receivable clerk are separate from handling cash. C) Examine a sample of duplicate sales invoices for credit approval by the credit manager. D) Review the aged schedule of accounts receivable to determine if receivables from officers are included. 3) As the auditor you are assessing the proper sample size to use in testing controls. When using attributes sampling which of the following is most correct? A) A 10% change in population size will have the least effect on sample size. B) A 10% change in the tolerable deviation rate will have the least effect on sample size. C) A 10% change in the expected deviation rate will have the least effect on sample size. D) A 10% change in the tolerable will have the least effect on sample size 4) In attributes sampling, an estimate of the expected population exception rate is necessary to plan the sample size. The relationship of expected population exception rate (EPER) to sample size is: A) direct (small EPER = small sample). B) inverse (small EPER = large sample). C) a variable (sometimes small, sometimes large) dependent on other factors present. D) indeterminate. 5) If an auditor, planning to use statistical sampling, is concerned with the number of a client’s sales invoices that contain mathematical errors, the auditor would most likely utilize which sampling technique? A) Random sampling with replacement B) Sampling for attributes C) Ssampling for variables D) Stratified random sampling 6) For which of the following audit procedures would audit sampling not be appropriate? A) Review sales transactions for large and unusual amounts. B) Examine a sample of duplicate sales invoices for credit approval. C) Compare the quantity on duplicate sales invoices with the quantity on related shipping documents. D) Audit sampling is appropriate for each of the above procedures. 7) Match eight of the terms (a-k) with the definitions provided below (1-8): a.Haphazard selection b.Attributes sampling c.Block sample selection d.Judgmental sampling e.Non-probabilistic sample selection f.Probabilistic sample selection g.Random sample h.Representative sample i.Statistical sampling j.Systematic sample selection k.Sampling distribution ________ 1. The use of mathematical measurement techniques to calculate formal statistical results and quantify sampling risk. ________ 2. A non-probabilistic method of sample selection in which items are selected in measured sequences. ________ 3. A sample whose characteristics are the same as those of the population. ________ 4. A statistical, probabilistic method of sample evaluation that results in an estimate of the proportion of items in a population containing a characteristic of interest. ________ 5. A non-probabilistic method of sample selection in which items are chosen without regard to their size, source, or other distinguishing characteristics. ________ 6. An auditor selects items such that each population item has a known probability of being included in the sample. ________ 7. A frequency distribution of the results of all possible samples of a specified size that could be obtained from a population containing some specific parameters. ________ 8. A sample in which every possible combination of elements in the population has an equal chance of constituting the sample.