Bases Are Needed for Evaluating Materiality

question 43

Multiple Choice

Bases are needed for evaluating materiality. If you used current liabilities or current assets, what minimum percentage would you use for planning materiality?

• A) 10%
• B) 5%
• C) 1%
• D) None of the above

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Definitions:

Unit Sales

The measure of the quantity of individual items sold by a company, as opposed to total revenue.

Break-Even

The point at which total costs and total revenues are equal, resulting in no net gain or loss.

Fixed Expense

Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance premiums.

Variable Expense

Expenses that vary directly with changes in production volume or business activity levels.