When Sampling, the Risk Always Exists _______

question 30

Multiple Choice

When sampling, the risk always exists _______.

• A)that the auditor's conclusion based on the sample may be different than the conclusion drawn if the auditor had audited the entire population.
• B)that the auditor's conclusion based on the sample may be the same as the conclusion drawn if the auditor had audited the entire population.
• C)that audit fees may be lowered as a result of auditing a sample
• D)that management may request a new sample

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Definitions:

Budget Variances

The difference between budgeted or planned financial activity and the actual financial performance, indicating over or underperformance against budget.

Machine-Hours

A measurement of the amount of time machines are operating, used as a basis for allocating machine-related costs to products or services.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not vary with the level of production, such as salaries of managers, rent of the factory, and depreciation of manufacturing equipment.

Budget Variance

The difference between budgeted figures for revenue or spending and the actual amounts incurred.