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True / False Questions 1.Increasing the expected misstatement for a probability-proportional-to-size

Question : True / False Questions 1.Increasing the expected misstatement for a probability-proportional-to-size : 1412433

 

True / False Questions

 

1.Increasing the expected misstatement for a probability-proportional-to-size sample increases the required sample size. 

 

 

 

 

 

2.Probability-proportional-to-size sampling is especially efficient for populations with high misstatement rates. 

 

 

 

 

 

3.The upper limit on misstatement in a probability-proportional-to-size sample plan consists of the total of the projected misstatement and the tolerable misstatement. 

 

 

 

 

 

4.A normally distributed sample is assumed when using probability-proportional-to-size sampling. 

 

 

 

 

 

5.An increase in the scope of analytical procedures may result in a lower allowable risk of incorrect acceptance for a substantive test of details. 

 

 

 

 

 

 

Multiple Choice Questions

 

6.In a probability-proportional-to-size sample with a sampling interval of $10,000, an auditor discovered that a selected account receivable with a recorded amount of $5000 had an audited amount of $4,000. If this were the only misstatement discovered by the auditor, the projected misstatement of this sample would be: 

 

 

A. $1,000.

 

B. $2,000.

 

C. $5,000.

 

D. $10,000.

 

 

 

 

7.In a probability-proportional-to-size sample with a sampling interval of $10,000, an auditor discovered that as selected account receivable with a recorded amount of $12,000 had an audited amount of $9,000. If this were the only misstatement discovered by the auditor, the projected misstatement of this sample would be: 

 

 

A. $2,000.

 

B. $2,500.

 

C. $3,000.

 

D. $10,000.

 

 

 

 

8.In a PPS sample, the most likely misstatement in the population is equal to the: 

 

 

A. Projected Misstatement.

 

B. Upper limit on misstatement.

 

C. Basic Precision.

 

D. Total misstatements identified in the sample.

 

 

 

 

9.When no misstatements are identified in a PPS sample, the upper limit on misstatement equals. 

 

 

A. An amount dependent upon the sample's standard deviation.

 

B. Basic precision.

 

C. ½ of the allowance for sampling risk.

 

D. Zero.

 

 

 

 

10.Which statement is most proper for evaluating the results of this PPS sample? 

 

 

A. Accept the population because the projected misstatement is less than the tolerable misstatement.

 

B. Accept the population because the sum of the projected misstatement and the basic precision exceeds the incremental allowance.

 

C. Reject the population because the sum of the projected misstatement, basic precision and incremental allowance exceeds the tolerable misstatement.

 

D. Reject the population because the tolerable misstatement exceeds the basic precision plus the incremental allowance.

 

 

 

 

 

 

 

Solution
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