Auditors Who Prefer Statistical to Nonstatistical Sampling Believe That the Principal

question 21

Multiple Choice

Auditors who prefer statistical to nonstatistical sampling believe that the principal advantage of statistical sampling flows from its unique ability to

• A) define the precision required to provide audit satisfaction.
• B) mathematically measure uncertainty.
• C) establish conclusive audit evidence with decreased audit effort.
• D) promote a more legally defensible procedural approach.

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Definitions:

Processing Department

A processing department is a division within a manufacturing facility where a specific stage of production is carried out, essential in process costing systems.

Process Costing

A costing method used when nearly identical products are produced through continuous processes, allocating costs based on process departments.

Journal Entries

The records of financial transactions in the double-entry bookkeeping system, where each transaction is noted in two accounts (debit and credit).

Transactions

Financial events that affect the assets, liabilities, and equity of a company recorded in its accounting system.