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:

Classical Decision Model

Views decision makers as acting in a world of complete certainty.

Clearly Defined Problem

A situation or issue that has been specified or articulated with clarity, making it easier to understand and solve.

Optimum Solution

The most favorable or desirable solution among a set of outcomes, typically involving the maximization of benefits or minimization of costs.

Classical Decision Model

A theory that outlines how decisions should be made, assuming perfect information and a rational, logical approach.