The Auditor's Preliminary Judgement About Materiality Is the Maximum Amount

question 28

True/False

The auditor's preliminary judgement about materiality is the maximum amount by which the auditor believes the financial statements could be misstated and still not affect the economic decisions of users.

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Definitions:

Net Income

The total profit or loss of a company after all revenues, expenses, taxes, and costs have been subtracted.

Financial Statements

Reports that summarize the financial performance and position of a business, including the balance sheet, income statement, and cash flow statement.

Accrued Revenues

Revenues earned but not yet received in cash or recorded at the statement date, often recognizing revenue before the payment is received.

Financial Statements

Financial Statements are formal records of the financial activities and position of a business, person, or other entity, presented in a structured manner.