When Performing a Test of Controls with Respect to Control

question 61

Multiple Choice

When performing a test of controls with respect to control over cash receipts,an auditor may use a systematic sampling technique with a start at any randomly selected item.The biggest disadvantage of this type of sampling is that the items in the population

• A) must be systematically replaced in the population after sampling.
• B) may systematically occur more than once in the sample.
• C) must be recorded in a systematic pattern before the sample can be drawn.
• D) may occur in a systematic pattern, thus destroying the sample randomness.

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Definitions:

British Pound

The currency of the United Kingdom, symbolized as GBP.

Forward Exchange Rate

The agreed-upon exchange rate for currencies to be swapped on a specified future date.

Spot Rate

The current market price at which a particular asset, such as currency or commodity, can be bought or sold for immediate delivery.

Discount

A reduction applied to the regular price of goods or services or the amount by which the present value of future cash flows is reduced for discounting purposes.