Which One of the Following Statements Is NOT Correct

question 145

Multiple Choice

Which one of the following statements is NOT correct?

• A) It is acceptable for auditors to use statistical sampling methods.
• B) The primary benefit of statistical sampling methods is the quantification of sampling risk.
• C) An advantage of using statistical sampling is that the cost/benefit ratio is always positive.
• D) It is acceptable for auditors to use non-statistical sampling methods.

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Definitions:

Perpetuity

An annuity in which the cash flows continue forever.

Preferred Stock

A class of share capital that provides shareholders with a fixed dividend payment prior to any dividends being paid to common stockholders and typically does not confer voting rights.

Cost Computation

The process of calculating the total cost involved in manufacturing a product or providing a service.

Dividend Growth Model

A valuation method used to estimate the price of a company's stock by assuming that dividends grow at a constant rate in perpetuity.