To Determine the Sample Size for Tests of Controls,the Auditor

question 81

Multiple Choice

To determine the sample size for tests of controls,the auditor needs to estimate the following information based on his professional judgment

• A)the relative rate of deviation for the population to be tested
• B)the expected rate of deviation for the population to be tested
• C)the desired level of assurance that the actual rate of deviation is not exceeded by the tolerable rate of deviation
• D)the number of sampling units in the population if the population is very large

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Definitions:

Post-closing Trial Balance

A summary of all account balances after closing entries are made, used to check the balance of debits and credits.

Adjusted Trial Balance

A list of all accounts and their balances after adjusting entries are made, used in the preparation of financial statements.

Closing Entry

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, thereby preparing the books for the next period.

Income or Loss

Income or loss refers to the financial result of a company’s operations over a specific period, indicating profitability or deficit.