1. In an audit sampling application, an auditor

a) Performs procedures on all items in a balance and makes a conclusion about the entire balance. b) Performs procedures on less than 100 percent of the items in a balance and formulates a conclusion about the entire balance. c) Performs procedures on less than 100 percent of the items in a class of transactions to become familiar with the client's accounting system. d) Performs analytical procedures on the client's unaudited financial statements when planning the audit.

2. Auditors consider statistical sampling to be characterized by the following:

a) Representative sample selection and nonmathematical consideration of the results. b) Carefully biased sample selection and mathematical calculation of the results. c) Representative sample selection and mathematical calculation of the results. d) Carefully biased sample selection and nonmathematical consideration of the results.

3. In which of the following scenarios would the use of sampling be most appropriate?

a) The population consists of a relatively small number of items. b) The need for precise information about the population is not important. c) The decision to be made is relatively critical. d) The costs associated with an incorrect decision are extremely high.

4. The risk that the decision made based on the sample will differ from the decision made based on the entire population is referred to as

a) Audit risk. b) Examination risk. c) Sampling risk. d) Nonsampling risk.

5. Which of the following is not a method used by auditors to control their exposure to sampling risk during the examination?

a) Determining an appropriate sample size. b) Performing the appropriate audit procedure. c) Ensuring that all items have an equal opportunity to be selected. d) Evaluating sample results using a mathematical basis.

6. Which of the following is an advantage of nonstatistical sampling?

a) It controls the auditor's exposure to sampling risk. b) It is required by generally accepted auditing standards. c) It ensures that samples are randomly selected. d) It is typically less expensive than statistical sampling.

7. Selecting a sample using a series of random numbers to identify sample items is referred to as

a) Block selection. b) Haphazard selection. c) Systematic random selection. d) Unrestricted random selection.

8. If systematic selection is used with a starting point of 10, a population size of 100, and a necessary sample size of 20, the first three items selected for examination would be

a) 10, 110, 210. b) 110, 210, 310. c) 10, 15, 20. d) 15, 20, 25.

9. A limitation of systematic random selection is that this method

a) Has a relatively low likelihood of yielding a representative sample. b) Results in a larger sample size than other selection methods. c) Can result in bypassing a number of items having similar characteristics. d) Cannot be used with statistical sampling plans.

10. Which of the following is appropriately used for statistical sampling applications?

Unrestricted Random Selection Block Selection a. Yes Yes b. Yes No c. No Yes d. No No