The Use of Performance Materiality Should

question 24

Multiple Choice

The use of performance materiality should:

• A)reduce the probability that the sum of immaterial and/or undetected misstatements in the financial statements is greater than materiality for the financial statements as a whole.
• B)increase the probability that the sum of immaterial and/or undetected misstatements in the financial statements is greater than materiality for the financial statements as a whole.
• C)reduce the probability that the sum of immaterial and/or undetected misstatements in the financial statements is less than materiality for the financial statements as a whole.
• D)increase the probability that the sum of immaterial and/or undetected misstatements in the financial statements is less than materiality for the financial statements as a whole.

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Definitions:

Piece-Rate Pay

Piece-rate pay is a compensation system where workers are paid a fixed rate for each unit of production completed.

Stock Options

Financial instruments granted to employees, giving them the right to buy the company's stock at a fixed price in the future.

Sales Commissions

Financial rewards given to sales personnel based on the volume or value of sales they have achieved, serving as an incentive.

Piece-Rate Pay

A compensation system where employees are paid based on the quantity of units they produce or complete.