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

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The 'Expected Error' in audit sampling is:

A. The maximum acceptable error

B. Error in the sample only

C. Actual error after testing

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

Answer: Option D

Solution (By JKSSB Mock Tests)

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

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In standard costing, if the actual material mix is changed due to a shortage of a specific material, how should the Material Mix Variance be calculated?

A. Using the original standard mix

B. Using the revised standard mix

C. Using the actual mix

D. It cannot be calculated

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Correct Answer: Option B

Explanation:
When there is a shortage of a material and the actual mix is altered, the Material Mix Variance must be calculated using the Revised Standard Mix, not the original standard mix.

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

Question #2

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Under-casting of a Sales book by Rs 1,000 will result in:

A. Suspense account with a debit balance

B. No effect on the Trial Balance totals

C. Debit column of Trial Balance being short by Rs 1,000

D. Credit column of Trial Balance being short by Rs 1,000

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Correct Answer: Option D

Explanation:
Sales have a credit balance. If it's under-casted, the total credit postings will be Rs 1,000 less, making the credit column short.

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

Question #3

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In partnership accounts, Garner vs. Murray rule applies to the situation of:

A. Change in profit sharing ratio

B. Insolvency of a partner during dissolution

C. Admission of a partner

D. Retirement of a partner

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Correct Answer: Option B

Explanation:
The rule dictates that if a partner becomes insolvent, the capital deficiency is borne by solvent partners in the ratio of their last agreed capital.

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

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