CAF-8 · Chapter 4 · Question 10 of 10
An auditor notices that 5 massive inventory items account for 60% of the total inventory value, while 10,000 small items account for the rest. What is the most effective approach for the 5 massive items?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) 100% examination of the 5 massive items.
Explanation
A 100% examination is appropriate when a population constitutes a small number of large value items that pose a significant risk.
More Evidence and Sampling MCQs
- Q2An auditor intends to select a sample of sales invoices. To ensure every invoice has an equal chance of being selected, which sampling…
- Q3What is the definition of 'Sampling Risk'?
- Q4To improve audit efficiency, an auditor divides the trade receivables population into three groups based on balance sizes (High, Medium…
- Q5Under what condition is it appropriate for an auditor to use 'Negative Confirmations' for trade receivables?
- Q6If an auditor is unable to obtain a response to a positive external confirmation request from a major debtor, what is the required next…