An Auditor Is Determining the Appropriate Sample Size for a Variables

question 29

Multiple Choice

An auditor is determining the appropriate sample size for a variables sampling application.Compared to prior engagements,the auditor concludes that the population variability has increased.In addition,the partner on the engagement is requiring lower levels of the risk of incorrect acceptance than those used in previous audits.What effect will these changes have on the auditor's determination of sample size?

• A)Both of these changes will decrease sample size.
• B)The increase in population variability will increase sample size; reducing sampling risk will have no effect on sample size.
• C)The increase in population variability will increase sample size; reducing sampling risk will decrease sample size.
• D)Both of these changes will increase sample size.

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Definitions:

Net Domestic Product

The aggregate worth of every product and service generated inside a nation over a particular timeframe, deducting depreciation.

Gross Domestic Product

The total market value of all final goods and services produced within a country in a specific time period, indicating economic health.

Depreciation

Depreciation is the accounting process of allocating the cost of tangible assets over their useful lives, reflecting wear and tear or obsolescence.

Real GDP

The total value of all goods and services produced within a country in a year, adjusted for inflation, providing a more accurate reflection of an economy's size and growth rate.