The Following Are Statements or Examples Related to Audit Sampling

question 27

Short Answer

The following are statements or examples related to audit sampling applications.Indicate,using the correct letter,which concept is most closely associated with the statement or example.Each concept may be related to more than one statement or example.
A.Statistical sampling
B.Nonstatistical sampling
C.Sampling risk
D.Nonsampling risk
____ 1.C.Jones,CPA,selected a sample and evaluated the results of her sample using the laws of probability.
____ 2.G.Wilson,CPA,checked to see if any signature was in the credit approval box on a sample of sales orders rather than looking for only authorized signatures.
____ 3.Based on a statistical sample,M.Jackson,CPA,concluded that the client's control was functioning effectively when the deviation rate in the population was actually unacceptable.
____ 4.I.Barnum,CPA,selected all invoices over $1,000 and all invoices recorded on the 15th of each month for his sample.
____ 5.When a client could not produce an invoice for a sample selected by the auditor,the auditor accepted the client's assurance that the invoice contained the appropriate approval.

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Definitions:

Net Operating Income

A measure of a company's profitability, calculated by subtracting operating expenses from operating income.

Average Operating Assets

The average value of the assets used in the normal operations of a business over a specific period, typically used in return on investment calculations.

Balanced Scorecard

An integrated set of performance measures that are derived from and support the organization’s strategy.

Strategy

A company’s “game plan” for attracting customers by distinguishing itself from competitors.