SOLVED

Learning Objective 15-3 1) A sample in which every possible combination of items in the population has an equal chance of constituting the sample is a: A) random sample. B) statistical sample. C) judgment sample. D) representative sample. 2) The process which requires the calculation of an interval and then selects the items based on the size of the interval is: A) statistical sampling. B) random sample selection. C) systematic sample selection. D) computerized sample selection. 3) In systematic sample selection, the population size is divided by the number of sample items desired in order to determine the: A) sampling interval. B) tolerable exception rate. C) computed upper exceptions rate. D) mean. 4) Which of the following methods of sample selection is appropriately used when selecting a random sample? A) Auditor’s judgmental selection of items Use of computer-generated random numbers Use of random number ables Yes No Yes B) Auditor’s judgmental selection of items Use of computer-generated random numbers Use of random number ables No Yes Yes C) Auditor’s judgmental selection of items Use of computer-generated random numbers Use of random number ables Yes No No D) Auditor’s judgmental selection of items Use of computer-generated random numbers Use of random number ables No Yes No 5) Correspondence is established between the random number table and the population by: A) identifying each item in the population with a unique number. B) deciding the number of digits to use in the random number table and their association with the population numbering system. C) defining which digits the auditor uses in a column and the method of reading the table. D) selecting a random starting point on the table. 6) Which of the following statements is not correct? A) It is acceptable to pick a starting point on a random number table by using a “blind stab” method. B) It is impossible to draw a six-digit random number from a table that is separated into columns of five digits. C) The only reason for selecting a random starting point on a random number table is to eliminate the predictability of the sample. D) When selecting a three-digit number from a table that is separated into columns of five digits, it is permissible to use the first three digits, the middle three digits, or the last three digits. 7) The advantage of systematic sample selection is that: A) it is easy to use. B) there is limited possibility of it being biased. C) it is unnecessary to determine if the population is arranged randomly. D) it automatically selects items material to the financial statements. 8) In performing a review of a client’s cash disbursements, an auditor uses systematic sample selection with a random start. The primary disadvantage of this technique is population items: A) may occur twice in the sample. B) must be reordered in a systematic pattern before the sample can be drawn. C) may occur in a systematic pattern, thus negating the randomness of the sample. D) must be replaced in the population after sampling to permit valid statistical inference. 9) Which of the following is an advantage of systematic sample selection over random number sampling? A) It provides a stronger basis for statistical conclusions. B) It enables the auditor to use the more efficient “sampling with replacement” tables. C) There may be correlation between the location of items in the population, the feature of sampling interest, and the sampling interval. D) It does not require establishment of correspondence between random numbers and items in the population. 10) What is the key advantage and disadvantage associated with systematic sample selection? How must auditors address this disadvantage? 11) Describe each of the four types of sample selection methods commonly associated with statistical audit sampling. 12) When selecting a sample, random numbers may be obtained either with replacement or without replacement. Although both selection methods are theoretically sound, auditors rarely use replacement sampling. A) True B) False 13) Although systematic sample selection is easy to use, its primary disadvantage is that it is not a probabilistic sampling method. A) True B) False