When Testing Controls, a Decrease in the Sample Size Will

question 18

Multiple Choice

When testing controls, a decrease in the sample size will occur when there is

• A) an increase in the tolerable rate of deviation.
• B) a decrease in the tolerable rate of deviation.
• C) an increase in the extent to which the auditor's risk assessment takes into account relevant controls.
• D) an increase in the number of sampling units in the population.

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Definitions:

Excel Spreadsheet

A digital worksheet or grid in Microsoft Excel, where users can organize data, perform calculations, and analyze information.

Clearing Account

An account used to temporarily hold transactions in progress or to reconcile discrepancies before the amounts are posted to the correct accounts.

Materials Quantity Variance

The difference between the actual amount of materials used in production and the expected amount, which can indicate efficiency or procurement issues.

Standard Cost

A predetermined cost of manufacturing a single unit or a number of product units during a specific period, used as a benchmark to control costs.