When Performing a Test of a Control Over Cash Disbursements,a

question 6

Multiple Choice

When performing a test of a control over cash disbursements,a CPA may use a systematic sampling technique with a start at any randomly selected item.The biggest disadvantage of this type of sampling is that the items in the population:

• A)Must be recorded in a systematic pattern before the sample can be drawn.
• B)May occur in a systematic pattern and destroy the sample randomness.
• C)May systematically occur more than once in the sample.
• D)Must be systematically replaced in the population after sampling.

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Definitions:

Cost of Equity

The return a firm theoretically pays to its equity investors to compensate them for the risk they undertake by investing their capital.

WACC

Weighted Average Cost of Capital; an estimation of a corporation's cost of capital, with each capital category being weighted in proportion.