The Two Most Important Factors That Determine the Appropriate Sample

question 31

Multiple Choice

The two most important factors that determine the appropriate sample size in audits are

• A)the auditor's expectation of errors and the effectiveness of the client's internal controls.
• B)the auditor's expectation of errors and materiality.
• C)the effectiveness of the client's internal controls and materiality.
• D)materiality and the type of audit procedure to be applied to the population.

---

Definitions:

Market Rate Of Interest

The prevailing interest rate available in the marketplace for investments of similar risk and maturity.

Serial Bonds

A type of bond issue that is structured so that a portion of the bonds matures at different intervals over a period of time, facilitating the gradual repayment of the debt.

Interest Expense

The cost incurred by an entity for borrowed funds, reported on the income statement as part of operating expenses if related to core operations, or as non-operating expenses if it is not.

Bonds Outstanding Method

A technique used to calculate the total amount of bonds that are currently issued and not yet redeemed or paid off by the issuer.