Last Year the Materiality for the Client Was $590 000

question 60

Multiple Choice

Last year the materiality for the client was $590 000.This year it is $400 000.All things being equal,how will this change in materiality affect the extent of tests of details?

• A)increase
• B)decrease
• C)no effect as the tests of controls will be increased
• D)no effect as the tests of controls will be decreased

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Definitions:

Earned Income

Income generated from active employment and work, including wages, salaries, tips, and other compensation.

Qualifying Widow(er)

A tax filing status allowing a surviving spouse with a dependent child to use married filing jointly tax rates for up to two years after the year of their spouse's death.

Dependent Child

A child who relies on a guardian for financial support and meets certain IRS requirements for tax purposes.

Taxable Income

The amount of a person's or organization's income used to determine how much tax is owed to the government.