Which of the Following Statements Is Correct Concerning Materiality in a Financial

question 134

Multiple Choice

Which of the following statements is correct concerning materiality in a financial statement audit?

• A) Analytical procedures performed during an audit's review stage usually decrease materiality levels.
• B) If the materiality amount used in evaluating audit findings increases from the amount used in planning, the auditor should apply additional substantive tests.
• C) The auditor's materiality judgments generally involve quantitative, but not qualitative, considerations.
• D) Materiality levels are generally considered in terms of the smallest aggregate level of misstatement that could be considered material to any one of the financial statements.

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Definitions:

Overjustification Effect

A phenomenon where providing an external incentive for a behavior that is already internally rewarding can lead to a decrease in intrinsic motivation for that behavior.

Intrinsic Motivation

The drive to engage in an activity for its own sake, deriving pleasure and satisfaction from the activity itself rather than external rewards.

Secondary Motivation

The drive to perform an action or engage in behavior based on external rewards or pressures, rather than intrinsic or personal desires.

Delay Of Gratification

The act of forgoing an instant gratification in favor of receiving a reward at a later time.