Question

Describe what is meant by a sampling unit. Explain why the sampling unit for verifying the existence of recorded sales differs from the sampling unit for testing for the possibility of omitted sales.

Answer 1

Answer:

Step-by-step explanation:

The sampling unit is the population item from which the auditor selects sample items. The major consideration in defining the sampling unit is making it consistent with the objectives of the audit tests. Thus, the definition of the population and the planned audit procedures usually dictate the appropriate sampling unit.

The sampling unit for verifying the existence of recorded sales would be the entries in the sales journal since this is the record the auditor wishes to validate.

The sampling unit for testing the possibility of omitted sales is the shipping document from which sales are recorded because the failure to bill a shipment is the exception condition of interest to the auditor.