In Performing a Review of a Client's Cash Disbursements, an Auditor

question 108

Multiple Choice

In performing a review of a client's cash disbursements, an auditor uses systematic sample selection with a random start. The primary disadvantage of this technique is population items

• A) may occur twice in the sample.
• B) must be reordered in a systematic pattern before the sample can be drawn.
• C) may occur in a systematic pattern, thus negating the randomness of the sample.
• D) must be replaced in the population after sampling to permit valid statistical inference.

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Definitions:

Income-Sharing Ratio

An agreed upon proportion used to distribute profits or losses among partners in a partnership.

Limited Liability Company

A corporate model that integrates the flow-through taxation characteristic of partnerships and sole proprietorships with the protective limited liability found in corporations.

Business Entity

A legal organization created by individuals, stockholders, or shareholders, with the purpose of operating for profit.

Partnership Form

A type of business organization in which two or more individuals manage and operate the business in accordance with the terms and objectives set out in the Partnership Deed.