If $15,000 Is Considered to Be Material to the Income

question 67

Multiple Choice

If $15,000 is considered to be material to the income statement,but $25,000 is material to the balance sheet,the auditor should set overall materiality at which of the following dollar amounts?

• A)$20,000
• B)$25,000
• C)$40,000
• D)$15,000

---

Definitions:

Operating Budgets

Detailed projections of income and expenses related to a company's operational activities for a specific period, typically one year.

Budgeted Balance Sheet

A budgeted balance sheet forecasts a company's financial position at a future date, including assets, liabilities, and shareholders' equity, based on projected financial activities.

Budgeted Income Statement

A projected financial statement that estimates a company's expected revenues, expenses, and net income for a future period based on a budget.

Production Facility Capacity

The maximum amount of goods a manufacturing facility can produce over a specific period under normal working conditions.