Which of the Following Is Not True with Respect to the Use

question 7

Multiple Choice

Which of the following is not true with respect to the use of monetary unit sampling (MUS) ?

• A)MUS selects individual dollars from an account balance for verification.
• B)Compared to classical variables sampling,MUS allows the auditors to more effectively control their exposure to sampling risk.
• C)MUS estimates the extent of misstatement in an account balance or class of transactions.
• D)MUS provides the auditor with a more conservative estimate of the misstatement than classical variables sampling.

---

Definitions:

Operating Leverage

A measure of how sensitive a company’s operating income is to a change in its sales volume, emphasizing the cost structure between fixed and variable costs.

EBIT

A gauge of company profits, Earnings Before Interest and Taxes, leaves out the charges for interest and taxes to show raw earnings.

Sales

The transactions involved in selling goods or services in the normal course of business, generating revenue for the company.

DOL

Degree of Operating Leverage; a measure of a company's fixed costs as a percentage of its total costs, indicating how earnings before interest and taxes (EBIT) change in response to a change in sales volume.