Multiple Choice Questions
The following questions relate to determining sample size in tests of details of balances. For each one, select the best response.
a. Mr. Murray decides to use stratified sampling. The reason for using stratified sampling rather than unrestricted random sampling is to
(1) Reduce as much as possible the degree of variability in the overall population.
(2) Give every element in the population an equal chance of being included in the sample.
(3) Allow the person selecting the sample to use personal judgment in deciding which elements should be included in the sample.
(4) Allow the auditor to emphasize larger items from the population.
b. Which of the following sample planning factors will influence the sample size for a test of details of balances for a specific account?

c. How would increases in tolerable misstatement and assessed level of control risk affect the sample size in substantive tests ofdetails?

Increase in Increase in Tolerable Misstatement e sample size e sample size Decrease sample size Decrease sample size Assessed Level of Control Risk Increase sample size Increase sample size e sample size e sample size