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MULTIPLE CHOICE:
ANSWER: D
ANSWER: C
ANSWER: B
160
Chapter 10 Statistical Sampling for Substantive Testing 161
ANSWER: B
ANSWER: B
ANSWER: C
techniques.
c. Allow the auditor to quantify, and therefore control,
the risk of making an incorrect decision based on
sample evidence.
d. Meet requirements of Statements on Auditing
Standards.
ANSWER: C
ANSWER: A
ANSWER: C
ANSWER: A
ANSWER: D
ANSWER: A
ANSWER: C
ANSWER: C
ANSWER: C
ANSWER: C
ANSWER: A
ANSWER: B
ANSWER: C
ANSWER: B
ANSWER: A
ANSWER: C
ANSWER: A
ANSWER: C
ANSWER: D
ANSWER: A
ANSWER: D
ANSWER: B
ANSWER: B
168 Chapter 10 Statistical Sampling for Substantive Testing
ANSWER: D
ANSWER: D
a. Account balance.
b. Account number.
c. Alphabetically by name.
d. Numerically by pages of the listing.
ANSWER: A
ANSWER: B
ANSWER: C
ANSWER: C
170 Chapter 10 Statistical Sampling for Substantive Testing
ANSWER: C
ANSWER: B
ANSWER: A
ANSWER: D
ANSWER: C
ANSWER: B
ANSWER: D
172 Chapter 10 Statistical Sampling for Substantive Testing
ANSWER: D
COMPLETION:
ANSWER: ALPHA
ANSWER: SMALLER
ANSWER: GREATER
49. For PPS sampling purposes, the allowance for sampling risk
is the sum of basic precision plus the .
ANSWER: OVERSTATEMENT
ANSWER: LESS
MATCHING:
A. Projected error
B. Achieved precision
C. Basic precision
D. Desired precision
174 Chapter 10 Statistical Sampling for Substantive Testing
____3. The range within which the true answer most likely falls.
____4. The likelihood that the sample range contains the true
value.
____6. The calculated range within which the true answer most
likely falls.
SOLUTION:
1. H
2. I
3. M
4. K
5. E
6. B
7. F
8. N
Chapter 10 Statistical Sampling for Substantive Testing 175
9. L
10. A
PROBLEM/ESSAY:
ALPHA/2
OR BETA Z VALUE
1.00% 2.33
2.00 2.06
2.50 1.96
5.00 1.65
10.00 1.29
20.0 .85
24.0 .71
SOLUTION:
a. 35
b. $4,800,000
c. $24,539
d. Downward adjustment of $1,184,4539
176 Chapter 10 Statistical Sampling for Substantive Testing
OVERSTATEMENT
ERRORS RELIABILITY FACTOR EXPANSION FACTOR
0 3.00 1.60
1 4.75
2 6.30
3 7.76
A $20,000 0
E $800,000 $400,000
S $220,000 0
SOLUTION:
a. 618
b. $22,653
c. $642,653
d. Allowance for sampling risk = $84,949 ($67,959 + $16,990)
Upper error limit = $727,602 ($642,653 + $84,949)