Using Nonstatistical Sampling, Which of the Following Courses of Action

question 4

Multiple Choice

Using nonstatistical sampling, which of the following courses of action would an auditor most likely follow in planning a sample of cash disbursements if the auditor is aware of several unusually large cash disbursements?

• A)Set the tolerable deviation rate at a lower level than originally planned.
• B)Identify the large and unusual disbursements as individually significant and test 100 percent.
• C)Increase the sample size to reduce the effect of the unusually large disbursements.
• D)Continue to draw new samples until all the unusually large disbursements appear in the sample.

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Definitions:

Supply Function

A mathematical model that illustrates the relationship between the supply of a good or service and its price, holding other factors constant.

Production Function

An equation that describes the relationship between inputs and the maximum output that can be produced with those inputs.

Competitive Markets

Market structures characterized by a large number of buyers and sellers, where no single participant has the power to significantly influence prices.

Long-Run Supply Curve

A graphical representation showing the quantities of a good a supplier is willing to produce and sell at different prices over a long period, without fixed inputs.