An Advantage of Statistical Sampling Over Nonstatistical Sampling Is That

question 88

Multiple Choice

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

• A)Eliminate nonsampling risk.
• 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:

Gain On Sale

The profit earned from the sale of an asset above its book value.

GAAP

A set of widespread accounting rules and standards, referred to as Generally Accepted Accounting Principles, used for financial reporting.

Fair Value

The estimated market value of an asset or liability, reflecting the amount at which it could be bought or sold in a current transaction between willing parties.

Residual Value

The estimated amount that an asset will be worth at the end of its useful life, often used in calculating depreciation and lease payments.