If the Size of the Sample to Be Used in a Particular

question 56

Multiple Choice

If the size of the sample to be used in a particular test of controls has not been determined by utilizing statistical concepts, but the sample has been chosen in accordance with random selection procedures:

• A)no inferences can be drawn from the sample.
• B)the auditor has committed a nonsampling error.
• C)depending on the size of the sample chosen, the auditor may actually achieve desired precision.
• D)the auditor will have to evaluate the results by reference to the principles of discovery sampling.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, including loans, bonds, or lines of credit.

Tax Expense

The total amount of taxes a company incurs on its taxable income, including federal, state, and local taxes.

Net Operating Income

A financial metric that calculates a company's profit after all operating expenses are subtracted from total revenue.

Residual Income

The net income an investment generates above a minimum required return.