(Objectives 17-3, 17-4, 17-5) The following relate to the use of statistical sampling for tests of details of balances. For each one, select the best response.
a. When the auditor uses monetary unit statistical sampling to examine the total dollar value of invoices, each invoice
(1) has an equal probability of being selected.
(2) can be represented by no more than one monetary unit.
(3) has an unknown probability of being selected.
(4) has a probability proportional to its dollar value of being selected.
b. Which of the following would be an advantage of using variables sampling rather than probability-proportional-to-size (PPS) sampling?
(1) An estimate of the standard deviation of the population’s recorded amount is not required.
(2) The auditor rarely needs the assistance of a computer program to design an efficient sample.
(3) The inclusion of zero and negative balances usually does not require special design considerations.
(4) Any amount that is individually significant is automatically identified and selected.
c. In applying variables sampling, an auditor attempts to
(1) estimate a qualitative characteristic of interest.
(2) determine various rates of occurrence for specified attributes.
(3) discover at least one instance of a critical deviation.
(4) predict a monetary population value within a range of precision.
Objective 17-3
Apply monetary unit sampling.
Objective 17-4
Describe variables sampling.
Objective 17-5
Use difference estimation in tests of details of balances.
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