In Allocating Financial Statement Materiality to the Various Accounts, the Auditor

question 31

Multiple Choice

In allocating financial statement materiality to the various accounts, the auditor should consider:

• A) the likelihood of misstatements in the account.
• B) the probable cost of verifying the account.
• C) neither the likelihood of misstatements in the account nor the probable cost of verifying the account.
• D) both the likelihood of misstatements in the account and the probable cost of verifying the account.
• E) the likelihood of misstatements in a transaction.

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Definitions:

Unsystematic

Lacking a plan, method, or coherence, often referring to information or actions that are disorganized or random.

Rigid

Describes an inability or unwillingness to adapt or change one's thoughts, behaviors, or attitudes despite new information or changing circumstances.

Behavior Therapy

A type of psychotherapy that focuses on changing undesirable behaviors through conditioning techniques.

Social Psychology

The scientific study of how people's thoughts, feelings, and behaviors are influenced by the actual, imagined, or implied presence of others.