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:

Probability Of Success

The likelihood of a given success event occurring, often denoted in scenarios like binomial outcomes where success is one outcome.

Trials

In statistics, trials refer to the number of attempts or individual experiments conducted during a study.

Binomial Distribution

A probability distribution that summarizes the likelihood that a value will take one of two independent states across a series of trials or experiments.

Hypergeometric Distribution

A discrete probability distribution that describes the probability of a given number of successes in draws from a finite population without replacement.