Correct & verified Complete Solutions
In PPS sampling plans, tolerable misstatement: - ANSWER has an inverse effect
on sample size.
In PPS sampling plans, the risk of incorrect rejection is: - ANSWER controlled
indirectly by specifying anticipated misstatement.
In the PPS sample size formula, which of the following is in the numerator? -
ANSWER Reliability factor rf
The most common selection method used in PPS sampling is: - ANSWER
Systematic selection
In PPS sampling plans, basic precision - ANSWER the allowance for sampling
risk when the sample contains no misstatements.
When no misstatements are found in a PPS sampling plan: - ANSWER projected
misstatement in the population is zero.
Whenever sampling is used in an audit procedure, uncertainty will be present. The
two
sources of this uncertainty are: - ANSWER sampling risk and nonsampling risk.
,The normal distribution underlies: - ANSWER Classical variables sampling
Which of the following sampling plans does not use normal distribution theory? -
ANSWER PPS sampling
The steps in a nonstatistical sampling plan for tests of controls are listed as
follows: - ANSWER Evaluate the sample results.
Which one of the following shows steps A through G in the correct order? -
ANSWER B, A, D, G, F, E, and C
In mean-per-unit-sampling, population size is: - ANSWER Critical
In a comparison between MPU sampling and PPS sampling, an explicit statement
is
required in MPU plans, but not PPS plans, for: - ANSWER risk of incorrect
rejection and population standard deviation.
In an MPU sampling plan, there is an inverse relationship between sample size
and: - ANSWER planned allowance for sampling risk and risk of incorrect
rejection.
In the evaluation of an MPU sampling plan where misstatements have been found,
the
auditor will not calculate: - ANSWER the tainting percentage.
, The greatest impact on audit efficiency comes from the risk(s) of: - ANSWER
assessing control risk too high and incorrect rejection.
Which of the following conditions is indispensable in using difference estimation?
- ANSWER Book values are known.
The bonding of employees will normally be expected to: - ANSWER serve as a
deterrent to dishonesty.
A company policy states that annual vacations are mandatory for all employees.
This
policy is most important for employees who: - ANSWER Handle cash receipts
A company has a policy of rotating employees' assigned duties. This policy is
most
important for employees who: - ANSWER Handle cash receipts
Auditors should evaluate new controls associated with all of the following except:
- ANSWER All of the above
An understanding of the revenue accounting system requires knowledge of all of
the
following except: - ANSWER how payables are recorded
In a credit-merchandising environment, which of the following documents serves
as the
basis for internal processing of an order? - ANSWER Sales order
, In a credit-merchandising environment, when a customer has been "billed," it
means
which of the following documents has been prepared? - ANSWER Sales invoice
Which of the following forms may serve as the bill of lading? - ANSWER
Shipping documents
Which of the following is not normally considered a step in the credit sales
functions? - ANSWER acquiring goods to fill the order
In general, the first department to use the "approved customer list" as an order
passes
through the credit sales system will be the: - ANSWER Sales order department
Standard control procedures over customer remittances received through the mail
include having t - ANSWER open the mail, restrictively endorse the checks, and
then list each remittance on a
multicopy prelist.
After making the deposit, the daily cash summary and the validated deposit slip
should be forwarded b - ANSWER general accounting.
Important documents and records used in processing sales adjustments include all
of the following except - ANSWER Debit memo
In most merchandising firm audits, the auditor's concern over sales adjustment
transactions is based up - ANSWER potential use of these transactions to conceal a
theft of cash.