The 'Expected Error' in audit sampling is: MCQ with Answer and Explanation

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The 'Expected Error' in audit sampling is:

A. Actual error after testing

B. The error the auditor expects to find in the population

C. Error in the sample only

D. The maximum acceptable error

Answer: Option B

Solution (By JKExamLibrary)

Expected error is estimated before testing; it affects sample size.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1 Report Error

Which of the following is not recorded in the Cash Book?

A. Credit purchases

B. Cash purchases

C. Bank charges

D. Cash sales

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Correct Answer: Option A

Explanation:
Credit purchases are recorded in purchase book, not cash book.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2 Report Error

The 'Engagement Risk' is different from audit risk; it relates to:

A. Inherent risk

B. Detection risk

C. Risk of loss or injury to the auditor's professional practice from litigation, adverse publicity, etc.

D. Risk of material misstatement

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Correct Answer: Option C

Explanation:
Engagement risk is a business risk for the auditor.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #3 Report Error

The 'Rotation of Audit Partners' for listed companies is required every:

A. 5 years

B. 10 years

C. 7 years (as per Companies Act 2013, audit firm rotation for certain companies, partner rotation for listed companies)

D. No rotation

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Correct Answer: Option C

Explanation:
Companies Act 2013 mandates partner rotation for listed companies.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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