Indicate Whether Each of the Following Represents an Application of a Statistical

question 11

Short Answer

Indicate whether each of the following represents an application of a statistical (S)or nonstatistical (N)sampling application.
1____.In order to begin testing the occurrence assertion for Bear's sales invoices,Lion determined the expected population deviation rate to be 1.25%,the tolerable rate of deviation to be 4% and the risk of overreliance to be 5%.
2____.Lion determined the tolerable rate of deviation to be low while testing controls concerning loan agreements.The audit team considered the sample size provided by the AICPA tables but decided that more loans needed to be tested to accurately evaluate the population.
3____.To test the accuracy of Bear's accounts receivable,Lion ordered the accounts into an aging list and selected the last fifty items for examination.
4____.A list of pre-numbered purchase orders was used to test the completeness assertion.Lion decided to randomly select items from the list for examination by identifying them from a perusal of files.
5____.Lion suspected the existence of fraud in Bear's payroll department.As a result,Lion set the expected population deviation rate at zero and used quantitative measures to ensure that sampling risk was controlled to acceptable levels.
6____.Lion used professional judgment to estimate the allowance for sampling risk to determine the likely rate of deviation in the population when testing the cutoff of Bear's sales invoices.

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Definitions:

Capitalism

An economic system characterized by private or corporate ownership of capital goods, investments determined by private decision, and prices, production, and distribution of goods determined primarily by competition in a free market.

Private Property

Property owned by individuals or companies, not by the state or public entities, and protected by law; includes both tangible and intangible assets.

Social Solidarity

The sense of unity and mutual support within a society, which binds individuals together and facilitates cooperation.

Strangers

Individuals who are unknown or unfamiliar to one another, often highlighting the potential for neither positive nor negative expectations in initial interactions.