Which of the Following Best Illustrates the Concept of Sampling

question 39

Multiple Choice

Which of the following best illustrates the concept of sampling risk?

• A)A randomly chosen sample may not be representative of the population as a whole on the characteristic of interest.
• B)An auditor may select audit procedures that are not appropriate to achieve the specific objective.
• C)An auditor may fail to recognize deviations in the documents examined for the chosen sample.
• D)The documents related to the chosen sample may not be available for inspection.

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Definitions:

Trend Balance Sheet

A financial statement that presents a company's financial position over multiple periods, highlighting trends in assets, liabilities, and equity.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership interest.

Earnings Before Interest

A financial metric that calculates a company's profitability before interest expenses are deducted; however, it is more commonly referred to as EBIT (Earnings Before Interest and Taxes).

Nonrecurring Items

Expenses or incomes that are not expected to happen regularly in a company's financial operations, often excluded for analysis purposes.