An Advantage of Statistical Sampling Over Nonstatistical Sampling Is That

question 122

Multiple Choice

An advantage of statistical sampling over nonstatistical sampling is that statistical sampling helps an auditor to

• A) Eliminate the risk of nonsampling error.
• B) Reduce the level of audit risk and overall materiality to a relatively low level.
• C) Measure the sufficiency of the evidence gathered.
• D) Minimize the failure to detect misstatements and irregularities.

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Definitions:

Management Decision-Making

The process by which management identifies, evaluates, and chooses among alternative courses of action to achieve organizational objectives.

Traditional Income Statement

An income statement format that separates costs into categories of cost of goods sold and operating expenses to calculate net income.

Mixed Costs

Costs that have both a fixed and variable component, changing with the level of output but not directly proportional to it.

CVP Analysis

Cost-Volume-Profit Analysis is a technique in managerial accounting that examines the impact of cost and volume changes on a company’s operating and net income.