California State University, Stanislaus ACCOUNTING 4110 Chapter 9: 1)The auditors have sampled 75 accounts from a population of 500 accounts receivable

California State University, Stanislaus

ACCOUNTING 4110

Chapter 9:

1)The auditors have sampled 75 accounts from a population of 500 accounts receivable. The sample items have a mean book value of $204 and a mean audited value of $207. The book value in the population is $100,000. What is the estimated audited value of the population using the mean-per-unit method?

2. The auditors have sampled 25 accounts from a population of 250 accounts receivable. The sample items have a mean book value of $206 and a mean audited value of $209. The book value in the population is $51,000. What is the estimated total audited value of the population using the difference method?
3. Which of the following is an element of sampling risk?

4. In assessing sampling risk, the risk of incorrect rejection and the risk of assessing control risk too high relate to the:
5. Which of the following statistical sampling techniques is least desirable for use by the auditors?
6. The auditors’ primary objective in selecting a sample of items from an audit population is to obtain:
7. Discovery sampling is particularly effective when:
8. The auditors are using unstratified mean-per-unit sampling to audit accounts receivable as they did in the prior year. Which of the following changes in characteristics or specifications would result in a larger required sample size this year than that required in the prior year?
9. Which of the following sampling techniques is typically used for tests of controls?
10. Which of the following is accurate regarding tolerable misstatement?
11. In which of the following circumstances is it least likely that tests of controls will be performed?
12. An auditor needs to estimate the average highway weight of tractor-trailer trucks using a state’s highway system. Which estimation method is most appropriate?
13. The professional development department of a large CPA firm has prepared the following illustration to familiarize the audit staff with the relationships of sample size to population size and variability and the auditors’ specifications in regard to the tolerable misstatement and the risk of incorrect acceptance.

14. Scott Duffney, CPA, has randomly selected and audited a sample of 100 of Will-Mart’s accounts receivable. Will-Mart has 3,000 accounts receivable accounts with a total book value of

Calculate the accounts receivable estimated audited value and projected misstatement using the:

a. 3,000 * $1,190 = $3,570,000 3,600,000-3,570,000=30,000

b. 1,190 – 1,198 = 8, 8*100 = 800, 1,198 *100 = 119,800, (800/119,800) * 3,600,000 = 24,040

3,600,000-24,040=3,575,960

c.

15. In the audit of Potomac Mills, the auditors wish to test the costs assigned to manufactured goods. During the year, the company has produced 2,200 production lots with a total recorded