1. Sampling risk:

MULTIPLE CHOICE

a. Is the risk that the results of the sample indicate additional testing is to be performed.

b. Is the risk that the results of the sample are not indicative of the population.

c. Is the risk associated with selecting the incorrect audit substantive test.

d. Is the risk associated with the nature of an item or account.

2. The effect of the auditor using stratified samples is to:

MULTIPLE CHOICE

a. Estimate the rate of deviation.

b. Require a smaller number of sample items.

c. Increase the tolerable rate.

d. Increase the allowance for sampling risk.

12. Which of the following is not a control over cash receipts?

MULTIPLE CHOICE

a. cash registers are used

b. customers are urged to take a printed receipt

c. receipts are deposited daily in the bank.

d. One employee participates in each transaction from beginning to end.

13. Which of the following is not considered a control over cash disbursements?

MULTIPLE CHOICE

a. All disbursements are made by checks.

b. All checks are prenumbered and the sequence is accounted for.

c. After signing, signed checks are returned to the accounting department that prepared them for signature.

d. blank checks are kept in a locked safe.

14. The purpose of analyzing bank transfers is to:

MULTIPLE CHOICE

a. detect lapping

b. detect kiting

c. Test controls relating to cash disbursements.

d. Test disbursements relating to cash receipts.

15. A bank cutoff statement is used to:

MULTIPLE CHOICE

a. Detect lapping

b. detect kiting

c. Test the year end bank reconciliation.

d. Test controls relating to cash disbursements and cash receipts.