8. Sampling and Statistical Quality Control

Question 1

Define standard deviation.

Answer 1

Standard deviation is a measure of the dispersion of a set of data from its mean.

Question 2

__________ is the percentage of times that a sample is expected to be representative of the population.

Answer 2

Confidence level.

Question 3

__________ is the range around a sample value that is expected to contain the true population value.

Answer 3

Confidence interval.

Question 4

List the measures of central tendency.

Answer 4

*Mean
*Median
*Mode

Question 5

Why is the median the best estimate of central tendency for many asymmetrical distributions?

Answer 5

The median is not biased by extremes.

Question 6

The subjective determination of sample size and selection is

Answer 6

Judgmental sampling.

Question 7

The quantitative determination of sample size and selection is

Answer 7

Statistical sampling.

Question 8

Define sampling risk.

Answer 8

The risk that a sample is not representative of the population.

Question 9

Which sampling approach gives all items in the population an equal chance of being selected?

Answer 9

Random sample.

Question 10

Name the two approaches to sampling.

Answer 10

*Nonstatistical
*Statistical

Question 11

What are the disadvantages of judgmental sampling?

Answer 11

*It does not provide a quantitative measure of sampling risk.
*It does not provide a quantitative expression of sample results.
*If the auditor is not proficient, the sample may not be effective.

Question 12

If deviations exist in the population, which attribute sampling method ensures the sample includes at least one deviation?

Answer 12

Discovery sampling.

Question 13

Reducing or enlarging the sample size based on the deviation rate in the population is

Answer 13

Stop-or-go (sequential) sampling.

Question 14

List the factors that sample size for an attribute test depends on.

Answer 14

*Confidence level
*Population size
*Expected deviation rate (expected rate of occurrence)
*Tolerable deviation rate (desired precision)

Question 15

Define the sample deviation rate.

Answer 15

The sample deviation rate is the number of deviations observed in a sample divided by the sample size. This rate is the best estimate of the population deviation rate.

Question 16

What are the five variables sampling techniques?

Answer 16

1.Unstratified mean-per-unit
2.Stratified mean-per-unit
3.Difference estimation
4.Ratio estimation
5.Monetary unit sampling

Question 17

What information is provided by variables sampling?

Answer 17

Variables sampling provides information about whether a stated amount (e.g., the balance of accounts receivable) is materially misstated.

Question 18

__________ are graphic aids for monitoring the status of any process subject to acceptable or unacceptable variations during repeated operations.

Answer 18

Statistical control charts.

Question 19

The limits of controls should be set so that the cost of an investigation is

Answer 19

Less than or equal to the benefits derived.

Question 20

What does acceptance sampling determine?

Answer 20

Acceptance sampling determines the probability that the rate of defective items in a batch is less than a specified level.

Question 21

What is a Pareto diagram?

Answer 21

A Pareto diagram is a bar chart that assists managers in what is commonly called 80:20 analysis, which states that 80% of all effects are the result of only 20% of all causes.

Question 22

__________ is the separation of a population into logical groups (subpopulations).

Answer 22

Stratification.