Which of the Following Is Not Correct About Materiality

question 20

Multiple Choice

Which of the following is not correct about materiality?

• A) The concept of materiality recognizes that some matters are more important for fair presentation of financial statements
• B) Materiality judgments are made in light of surrounding circumstances and necessarily involve quantitative and qualitative judgments
• C) Materiality should be predictable from audit to audit so that the readers of financial statements know what constitutes materiality
• D) An auditor's consideration of materiality is influenced by the auditor's perception of the needs of the readers of the financial statements

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Definitions:

Accounting Cycle

The complete series of accounting steps taken throughout the period until the financial statements are prepared, including transactions, journal entries, trial balance, and financial reporting.

Office Supplies

Items such as pens, paper, calculators, and other materials used in an office setting for daily operations.

Acquisition

The process by which one company purchases most or all of another company's shares to gain control of that company.

Accounting Cycle

The series of steps in processing financial transactions, from the initial recording to the presentation of financial statements.