Which of the Following Best Describes the Distinguishing Feature of Statistical

question 54

Multiple Choice

Which of the following best describes the distinguishing feature of statistical sampling?

• A)It requires the examination of a smaller number of supporting documents.
• B)It permits the auditor to use the most efficient sample size and to quantify the sampling risk to reach a statistical conclusion about the population.
• C)It reduces the problems associated with the auditor's judgment concerning materiality.
• D)It is evaluated in terms of two parameters: statistical mean and random selection.

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Definitions:

EPS

Earnings Per Share; a key financial metric that divides a company's profit by the outstanding shares of its common stock.

Equity

The value of an asset after deducting the value of liabilities, representing an owner's interest in a company or property.

Debt

Money owed by one party to another, typically used as a means of borrowing to finance an activity or purchase.

Financial Leverage

The use of borrowed funds to finance the acquisition of assets, with the expectation that the income or capital gain from the assets will exceed the cost of borrowing.