Chapter 09 – Audit Sampling: An Application to Substantive Tests of Account Balances
1. The purpose of audit sampling is to draw inferences about the entire population from the
results of a sample.
2. The size of the upper limit on misstatement is largely dependent on the sample size, which is
inversely related to the desired confidence level.
3. Monetary-unit sampling is based on attribute sampling concepts.
4. Confidence level is inversely related to sample size.
Chapter 09 – Audit Sampling: An Application to Substantive Tests of Account Balances
5. Expected misstatement is directly related to sample size.
6. Monetary-unit sampling is commonly used by auditors to test controls.
7. The objective of monetary-unit sampling is to test the assertion that no material
misstatements exist in an account balance or class of transactions.
8. Haphazard selection allows the auditor to select items judgmentally.
Chapter 09 – Audit Sampling: An Application to Substantive Tests of Account Balances
9. After a sample is drawn randomly, the allowance for sampling risk must be statistically
quantified within a specified level of confidence.
10. Classical variables sampling uses normal distribution theory to evaluate the characteristics
11. The risk of incorrect acceptance and the risk of overreliance relate to the
Chapter 09 – Audit Sampling: An Application to Substantive Tests of Account Balances
12. While performing a substantive test of details during an audit, the auditor determined that
the sample results supported the conclusion that the recorded account balance was materially
misstated. It was, in fact, not materially misstated. Such a situation illustrates the risk of
13. A number of factors influence the sample size for a substantive test of details of an account
balance. All other factors being equal, which of the following would lead to a larger sample
size?
Chapter 09 – Audit Sampling: An Application to Substantive Tests of Account Balances
14. Which of the following sample planning factors would influence the sample size for a
substantive test of details for a specific account?
15. In statistical or nonstatistical sampling methods used in substantive testing, an auditor most
likely would stratify a population into meaningful groups if
Chapter 09 – Audit Sampling: An Application to Substantive Tests of Account Balances
16. An auditor is preparing to sample a client’s customer receivables for overstatement. A
statistical sampling method that automatically provides stratification when using systematic
selection is
17. Which of the following statements best describes an inherent limitation of the
monetary-unit sampling method?
18. For monetary-unit sampling, the number of items tested is
Chapter 09 – Audit Sampling: An Application to Substantive Tests of Account Balances
19. Monetary-unit sampling should not be used if
20. In monetary-unit sampling, population size is
21. Monetary-unit sampling is said to eliminate the need to stratify the sample because
Chapter 09 – Audit Sampling: An Application to Substantive Tests of Account Balances
22. An accounts receivable account balance is $500,000 and the auditor determines a sample
size of 30 would provide adequate assurance. The auditor plans to use a monetary-unit
sampling plan with systematic sample selection. The auditor notices that there are six customer
accounts of at least $15,000 and would like the systematic selection technique to select all items
that are at least $15,000, even if that means the sample size is slightly larger than 30. To achieve
the auditor’s objectives, the sampling interval should be
23. For monetary-unit sampling, a sampling interval of 400 means that
Chapter 09 – Audit Sampling: An Application to Substantive Tests of Account Balances
24. Which of the following sampling methods would be used to estimate a numerical
measurement of population, such as the dollar value of an account?
25. In applying classical variables sampling, an auditor attempts to
Chapter 09 – Audit Sampling: An Application to Substantive Tests of Account Balances
26. In a monetary-unit sample with a sampling interval of $5,000, an auditor discovers that a
selected account receivable with a recorded amount of $10,000 has an audit amount of $8,000.
If this were the only error discovered by the auditor, the projected misstatement for this sample
would be
27. Precision is a statistical measure of the maximum likely difference between the sample
Chapter 09 – Audit Sampling: An Application to Substantive Tests of Account Balances
28. In examining cash disbursements, an auditor plans to choose a sample using systematic
selection with a random start. The primary advantage of such a systematic selection is that
population items
29. Which of the following courses of action would an auditor most likely follow in planning a
sample of cash disbursements if the auditor is aware of several unusually large cash
disbursements?
Chapter 09 – Audit Sampling: An Application to Substantive Tests of Account Balances
30. What is the primary objective of testing all individually significant items rather than sample
testing?
31. In statistical sampling, setting the appropriate confidence level and desired sample
precision are decisions made by the auditor that will affect sample size for a substantive
procedure. Which of the following should not be a factor in the choice of desired precision?
Chapter 09 – Audit Sampling: An Application to Substantive Tests of Account Balances
32. Which of the following would be an improper technique when using monetary-unit
statistical sampling in an audit of accounts receivable?
33. In a monetary-unit sampling plan, the upper misstatement limit is $11,200 and the risk of
incorrect acceptance is 5%. This means that