June 09 - F8 Bit Session 8

[siddharth]

HI,

Following are the questions for this session, answers on sunday

1. If all other factors remained constant, changing the tolerable deviation rate from 10% to 12 % would mean:

a. that the sample size would increase
b. that the sample size would remain the same – there would be no effect on the sample size
c. that the sample would decrease
d. that the sample size could not be determined without knowing the size of the population

2. An underlying feature of random based selection of items is that each

a. stratum of the accounting population must be given equal representation in the sample
b. item in the accounting population must be randomly ordered
c. item in the accounting population should have an oppurnity to be selected
d. item must be systematically selected using replacement

3. Which of the following methods of sample selection is the least desirable in terms of extrapolating results to the population?

a. Systematic selection
b. Random selection
c. Block selection
d. Haphazard selection

4. What audit tests do you think would be most appropriate for monetary unit sampling?

a. To select a sample of debtors to confirm their balances
b. To ensure an appropriate level of management has reviewed all invoices.
c. To check a sample of creditors to circularize
d. To check that all wages payments made during the year are bonafide

[Suze]

1. c - as the tolerable deviation rate increases sample size reduces

2. c - random selection ensures that all items in the population have an equal chance of selection

3. c - if block selection is used then we would be testing in specific periods (eg. 1st March to 7th March) hence we may choose the period that is problem free

4. b - I choose this answer because i am not sure of the answer and that to me is the odd one out.

[siddharth]

Answers

1. c that the sample would decrease

2. c item in the accounting population should have an opportunity to be selected

3. c Block selection

4. a To select a sample of debtors to confirm their balances

[siddharth]

Very Good Suze you got 3/4. i hope this sessions are very helpful to you. post for any clarifications in answers

[Suze]

Oh yes it is very helpful.

Multiple choice is the best way to understand anything. Because the answers are so close you have to think and one tiny point can make you select the incorrect answer.

Please explain why we would choose 4 (a) and not d or c