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The 1,000 accounts receivable of Winco Company have a total book value of $20,000 (Average book value- S20). Bob Duffo, CPA has selected and audited a sample of 50 accounts with the following mean values: 1. Book value of $19.00 2. Audited value of $19.60 22) 22) What is the estimated total audited value using mean-per-unit sampling? A) S19,000 B)S20,632. C)$19,600. D) $20,000 23) Ifall other factors specified in an attributes sampling plan remain constant, decreasing the tolerable rate and increasing the estimated population deviation rate would have what effect on sample size? 23) A) Decrease. B) Remain the same. C) Increase. D) Indeterminate, depends upon exact change being made. 24) When performing tests of controls over authorization of cash receipts, which of the following sampling methods would be most appropriate? 24) A) Ratio. B) Variables. C) Stratified. D) Attributes. 25) When using sampling for tests of controls, which of the following audit consequences may follow? 25) A) If sample results indicate that the control is operating effectively, but in fact it is not, control risk will be assessed too high. B) If sample results indicate that the control is not operating effectively, but in fact it is operating effectively control risk will be assessed too low C) If sample results indicate that the control is operating effectively, but in fact it is not, control risk will be assessed too low D) If sample results indicate that the control is not operating effectively, but in fact it is operating effectively, the audit is likely to be faulty because of reduced substantive tests. 26) The auditors' failure to recognize a misstatement in an amount or a deviation in an internal control data processing procedure is described as a: 26) A) Statistical error. B) Nonsampling error. C) Sampling misstatement. D) Standard error of the mean. 27) Assume a mean-per-unit estimation variables sampling application with a tolerable misstatement of $70,000 and a book value of $700,000. After performing the sampling plan, the auditors calculated an adjusted allowance for sampling risk of $45,000 and a point estimate of the population's total audited value to be $650,000. Based on hese results, the auditor would: 27) Because the total audited value adjusted allowance for sampling risk does not include the book value, nclude that there is too great a risk that the account balance is materially misstated. Because the tolerable misstatement exceeds the adjusted allowance for sampling risk, conclude that there is too at a risk that the account balance is materially misstated. Because the tolerable misstatement exceeds the adjusted allowance for sampling risk, conclude that the ulation does not contain a material misstatement. Because the total audited value tolerable misstatement includes the book value, conclude that the population s not contain a material misstatement. The 1,000 accounts receivable of Winco Company have a total book value of $20,000 (Average book value- S20). Bob Duffo, CPA has selected and audited a sample of 50 accounts with the following mean values: 1. Book value of $19.00 2. Audited value of $19.60 22) 22) What is the estimated total audited value using mean-per-unit sampling? A) S19,000 B)S20,632. C)$19,600. D) $20,000 23) Ifall other factors specified in an attributes sampling plan remain constant, decreasing the tolerable rate and increasing the estimated population deviation rate would have what effect on sample size? 23) A) Decrease. B) Remain the same. C) Increase. D) Indeterminate, depends upon exact change being made. 24) When performing tests of controls over authorization of cash receipts, which of the following sampling methods would be most appropriate? 24) A) Ratio. B) Variables. C) Stratified. D) Attributes. 25) When using sampling for tests of controls, which of the following audit consequences may follow? 25) A) If sample results indicate that the control is operating effectively, but in fact it is not, control risk will be assessed too high. B) If sample results indicate that the control is not operating effectively, but in fact it is operating effectively control risk will be assessed too low C) If sample results indicate that the control is operating effectively, but in fact it is not, control risk will be assessed too low D) If sample results indicate that the control is not operating effectively, but in fact it is operating effectively, the audit is likely to be faulty because of reduced substantive tests. 26) The auditors' failure to recognize a misstatement in an amount or a deviation in an internal control data processing procedure is described as a: 26) A) Statistical error. B) Nonsampling error. C) Sampling misstatement. D) Standard error of the mean. 27) Assume a mean-per-unit estimation variables sampling application with a tolerable misstatement of $70,000 and a book value of $700,000. After performing the sampling plan, the auditors calculated an adjusted allowance for sampling risk of $45,000 and a point estimate of the population's total audited value to be $650,000. Based on hese results, the auditor would: 27) Because the total audited value adjusted allowance for sampling risk does not include the book value, nclude that there is too great a risk that the account balance is materially misstated. Because the tolerable misstatement exceeds the adjusted allowance for sampling risk, conclude that there is too at a risk that the account balance is materially misstated. Because the tolerable misstatement exceeds the adjusted allowance for sampling risk, conclude that the ulation does not contain a material misstatement. Because the total audited value tolerable misstatement includes the book value, conclude that the population s not contain a material misstatement
