When Does the Auditor Use Simple Random Sampling

question 62

Multiple Choice

When does the auditor use simple random sampling?

• A) when the auditor has a particular judgmental criteria that is used to select the sample
• B) where the auditor wants numbers in sequence and would like to select the sample rapidly
• C) for testing of cutoff after the year end with respect to accounts payable
• D) for populations where each item is considered to have the same characteristics for audit purposes

Discuss the factors affecting the negotiability and enforcement of written promises and assignments.

Understand the difference between a cashier's check and a certified check.

Understand the reasons why a bank might refuse to certify a check.

Understand the circumstances under which a bank might refuse to honor a cashier's check.

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Definitions:

Net Income

Net earnings of a business post deductions of any costs and taxes from revenue.

Cash Dividend

A distribution of a company's earnings to its shareholders in the form of cash.

Consolidated Balance Sheet

A balance sheet that presents the assets, liabilities, and equity of a parent company and its subsidiaries as one entity, after eliminating inter-company transactions.

Deferred Income Tax Asset

A Deferred Income Tax Asset is an accounting term for items that reduce future tax payments due to temporary differences between the financial statement carrying amount and the tax basis of assets and liabilities.