An Advantage of Using Statistical Over Non-Statistical Sampling Methods in Tests

question 33

Multiple Choice

An advantage of using statistical over non-statistical sampling methods in tests of controls is that the statistical methods:

• A) provide an objective basis for quantitatively evaluating sampling risk.
• B) afford greater assurance than a non-statistical sample of equal size.
• C) eliminate the need to use judgment in determining appropriate sample sizes.
• D) can more easily convert the sample into a dual-purpose test useful for substantive testing.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds; it is the price paid for the use of borrowed money.

Carrying Value

The amount at which an asset is recognized in the balance sheet, subtracting any accumulated depreciation or amortization.

Maturity

The date on which a financial instrument or obligation becomes due and is to be paid or settled.

Face Value

The nominal value printed on a bond or stock certificate, representing its legal value.