Benchmarks Are Needed for Evaluating Materiality

question 14

Multiple Choice

Benchmarks are needed for evaluating materiality.If you used current liabilities or current assets, what minimum percentage would you use for planning materiality?

• A) 5%
• B) 10%
• C) 1%
• D) none of the above

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Definitions:

Trading Debt Securities

Securities bought and held primarily for sale in the near term to generate income on short-term price differences.

Fair Value

The estimated price at which an asset or liability could be traded in a fair transaction between willing parties.

Held-to-maturity Securities

Financial instruments that a company has the intent and ability to hold until they mature.

Interest Revenue

Income earned from lending funds or investing in interest-bearing financial instruments.