Question: MULTIPLE CHOICE QUESTIONS 1 For which of the following auditing procedures

1. For which of the following auditing procedures would sampling be most appropriate?
a. Examining documents.
b. Inquiring of management.
c. Observing controls being completed.
d. Conducting analytical procedures.

2. Which of the following activities would be most likely to be accomplished using sampling?
a. Sorting a file to identify the largest items.
b. Scanning for unusual transactions.
c. Selecting items and tracing back to source documents.
d. Footing the file.

3. Which of the following is a question that the auditor will answer when sampling?
a. Which population and sampling unit should be tested, and what characteristics should be examined?
b. How many items should be selected for audit testing?
c. Which items should be included in the sample?
d. What inferences can be made about the overall population from the sample?
e. All of the above.

4. Refer to Exhibit and determine which of the following terms matches this definition: the risk that the auditor will conclude that the state of internal controls is effective when internal controls are actually not effective.
a. The risk of incorrect acceptance of internal control reliability.
b. The risk of incorrect acceptance of book value.
c. The risk of incorrect rejection of internal control reliability.
d. The risk of incorrect rejection of book value.

5. Refer to Exhibit 8.4 and determine which of the following statements is true.
a. In nonstatistical sampling, sample size is determined by auditor judgment.
b. In statistical sampling, the sample must be randomly selected to give each unit in the population an equal chance to be included in the sample.
c. In nonstatistical sampling, evaluation is based on auditor judgment and projections are based on sample results.
d. In statistical sampling, the auditor is required to define acceptable risk in advance.
e. All of the above.

6. Which of the following statements is false?
a. When properly used, either nonstatistical or statistical sampling can be effective in providing sufficient appropriate audit evidence.
b. Statistical sampling allows the auditor to precisely control the risk of making an incorrect inference about the population from which the sample is taken, whereas nonstatistical sampling does not allow such control.
c. Nonstatistical sampling may help avoid second guessing by regulators or jurors should those parties question the quality of the sampling method used.
d. Combining statistical sampling with audit judgment generally produces a higher quality audit conclusion than using audit judgment alone.

7. In attributes sampling, which of the following will not affect the determination of sample size?
a. Sampling risk.
b. The tolerable rate of deviation.
c. The expected population deviation rate.
d. The risk of incorrect rejection of book value.

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