Data Analytics For Accounting
19th Edition
ISBN: 9781260375190
Author: RICHARDSON, Vernon J., Teeter, Ryan, Terrell, Katie
Publisher: Mcgraw-hill Education,
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Question
Chapter 6, Problem 3MCQ
To determine
Identify the characteristics of the monetary unit sampling from the given options.
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When using monetary unit sampling, reliability factors are used in calculating:
Basic precision and incremental allowance.
Incremental allowance.
Projected misstatement.
Projected misstatement and incremental allowance.
Other factors equal when planning a monetary unit sample, which of the following is true regarding the maximum tolerable misstatement (M)?
a.
M is based on the sample results.
b.
the larger M is, the lower the confidence.
c.
the larger M is, the smaller the sample.
d.
the larger the expected misstatement, the smaller M is.
Which of the following statements is correct about monetary unit sampling?a. The risk of incorrect acceptance must be specified.b. Smaller logical units have a higher probability of selection in the sample than larger units.c. Each logical unit in the population has an equally likely chance of being selected in the sample.d. The projected misstatement cannot be calculated when one or more misstatements are discovered.
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Similar questions
- Which of the following best describes the method of determining the ULRD?a. Expected population deviation rate + Allowance for sampling risk.b. Risk of underreliance + Allowance for sampling risk.c. Sample rate of deviation + Allowance for sampling risk.d. Tolerable rate of deviation + Allowance for sampling risk.arrow_forwardMonetary Unit and Classical Variables Sampling. Indicate whether each of the following characteristics applies to monetary unit sampling (MUS), classical variables sampling (CVS),both MUS and CVS (both), or neither MUS nor CVS (neither).a. May be used in conjunction with substantive procedures.b. Tends to select higher dollar items for examination.c. Is more effective in identifying overstatements.d. Incorporates assessments of tolerable misstatement in determining sample size.e. Incorporates assessments of the population variability in determining sample size.f. Controls the audit team’s exposure to the risk of incorrect rejection and the risk of incorrect acceptance.g. Requires the audit team to project discovered misstatements to the population.h. Can expose the audit team to nonsampling risk.i. May be used in conjunction with the study and evaluation of internal control.j. Is more appropriate for use when a higher number of misstatements is anticipated.arrow_forwardWhat is the relationship between sample size and (a) sampling risk, (b) tolerable rate of deviation,and (c) expected population deviation ratearrow_forward
- In calculating the projected misstatement in monetary unit sampling, accounts with a book value larger than the sampling interval are extended to the projected misstatement at their: Misstatement amount. Actual book value. Tainting percentage times the sampling interval. Tainting percentage times their book value.arrow_forward1. Which of the following would be designed to estimate a numerical measurement of a population, such as monetary value?* A. Sampling for variables B. Sampling for attributes C. Sequential sampling D. Discovery sampling E. None of themarrow_forwardWhen using monetary unit sampling, the allowance for sampling risk is composed of: Basic precision and incremental allowance. Projected misstatement and basic precision. Projected misstatement and incremental allowance. Projected misstatement, basic precision, and incremental allowance.arrow_forward
- Which of the following combinations results in an increase in sample size in an attribute sample? a. Allowable Risk of Overreliance Tolerable Rate Expected Population Deviation Rate Decrease Decrease Increase b. Allowable Risk of Overreliance Tolerable Rate Expected Population Deviation Rate Decrease Increase Decrease c. Allowable Risk of Overreliance Tolerable Rate Expected Population Deviation Rate Increase Increase Decrease d. Allowable Risk of Overreliance Tolerable Rate Expected Population Deviation Rate Increase Increase Increase e. Allowable Risk of Overreliance Tolerable Rate Expected Population Deviation Rate Increase Decrease Increasearrow_forwardWhen using monetary unit sampling, a population is accepted as being materially correct when the: Tolerable misstatement is greater than the upper limit on misstatement. Incremental allowance is less than the upper limit on misstatement. Projected misstatement is less than the upper limit on misstatement. Basic precision is greater than the projected misstatement.arrow_forwardThe concept of beta is most closely associated with:a. Correlation coefficients.b. Mean-variance analysis.c. Nonsystematic risk.d. Systematic risk.arrow_forward
- Which of the following statistical techniques are used to test controls? Mean-per-unit sampling. Attribute sampling. Difference estimation. Ratio estimation.arrow_forwardThe distance from the sample estimate that has a certain likelihood (equal to reliability) ofincluding the true population value is known as thea. Confidence.b. Mean.c. Precision.d. Precision interval.arrow_forwardA financial risk is not possible to evaluate with a. Standard deviatiom b. Mean value c. Coefficient of variability d. Variabilityarrow_forward
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