The following questions relate to determining sample size in tests of details of balances. For each one, select the best response.
a. Murray decides to use stratified sampling. The reason for using stratified sampling
rather than unrestricted random sampling is to
(1) reduce as much as possible the degree of variability in the overall population.
(2) give every element in the population an equal chance of being included in the
sample.
(3) allow the person selecting the sample to use personal judgment in deciding
which elements should be included in the sample.
(4) allow the auditor to emphasize larger items from the population.
b. How would increases in tolerable misstatement and assessed level of control risk af-
fect the sample size in substantive tests of details?
Increase in Tolerable
Misstatement
Increase in Assessed Level
of Control Risk
(1) Increase sample size Increase sample size
(2) Increase sample size Decrease sample size
(3) Decrease sample size Increase sample size
(4) Decrease sample size Decrease sample size
c. Which of the following sample planning factors will influence the sample size for a
test of details of balances for a specific account?
Expected Amount
of Misstatements
Measure of Tolerable
Misstatement
(1) No No
(2) Yes Yes
(3) No Yes
(4) Yes N