The Multiple Choice Questions Blog

When determining a sample size for tests of controls, an auditor should consider several factors.

For the factor below, select whether it would cause the same size to increase, decrease, have no impact or to have only a negligible effect.

• An increase in tolerable misstatement

Select ONE answer:

1. Decrease
2. Have only a negligible effect
3. Increase
4. Has no impact

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – An increase in tolerable misstatement will cause a decrease in sample size, as an increase in the amount of ‘acceptable misstatements’ (or audit risk acceptable) will reduce the extent of the work necessary to be performed (as there is a corresponding acceptable increase in detection risk).
2. Not correct
3. Not correct
4. Not correct

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When determining a sample size for tests of details, an auditor should consider several factors.

For the factor below, select whether it would cause the sample size to increase, to decrease, have a negligible effect, or it depends.

• The population has been stratified.

Select ONE answer:

1. Has a negligible effect
2. Increase
3. It depends
4. Decrease

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Stratifying the population decreases the sample size (as testing is more efficient).

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When determining a sample size for tests of details, an auditor should consider several factors.

For the factor below, select whether it would cause the sample size to increase, to decrease, have a negligible effect, or it depends.

• The assessed risk of a material misstatement in respect of a balance has been reappraised and has increased.

Select ONE answer:

1. Decrease
2. Has a negligible effect
3. Increase
4. It depends

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – When the assessed risk of material misstatement for a balance is increased, the sample size increases (ie, more work is needed for higher risk balances).
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

When determining a sample size for tests of details, an auditor should consider several factors.

For the factor below, select whether it would cause the sample size to increase, to decrease, have a negligible effect, or it depends.

• The auditor’s required confidence level increases.

Select ONE answer:

1. Decrease
2. Increase
3. Has a negligible effect
4. It depends

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – When the required confidence level increases the sample size increases (ie, the auditor needs to do more work to be more confident).
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

In respect of an assurance engagement, which ONE of the following is the least persuasive method of gathering evidence?

Select ONE answer:

1. Inspection of a sales invoice
2. Inspection of a supplier’s invoice
3. Reperformance of a client’s supplier statement reconciliation
4. Reperformance of a depreciation calculation

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – Inspection of a sales invoice produced by the client would constitute the least persuasive method of gathering evidence as it is the least reliable of all the options. The supplier’s invoice is more reliable as it comes from a third party and reperformance of calculations and reconciliations is also more reliable as this evidence is generated by the assurance provider/reporting accountant.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.