Which of the Following Statements Best Describes a Relationship Between

question 1

Multiple Choice

Which of the following statements best describes a relationship between sample size and other elements of auditing?

• A)If materiality increases, so will the sample size.
• B)If the desired level of assurance increases, sample sizes can be smaller.
• C)If materiality decreases, sample size will need to increase.
• D)There is no relationship between sample size and materiality or the desired level of assurance.

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Definitions:

FIFO

"First In, First Out," an inventory valuation method where goods purchased or produced first are the first ones to be sold or used.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated by adding new purchases to beginning inventory and subtracting the cost of goods sold.

Periodic Inventory System

A periodic inventory system is a method of inventory valuation in which inventory is physically counted at the end of a specific period to determine the cost of goods sold and ending inventory.

Average Cost Method

An inventory costing method wherein the cost of goods sold and remaining inventory is valued at the average cost of all inventory items purchased during a period.