The Highest Level of Materiality Exists When

question 88

Multiple Choice

The highest level of materiality exists when

• A) users are likely to make incorrect decisions if they rely on the overall financial statements.
• B) there has been a departure from GAAP.
• C) amounts are material but do not overshadow the financial statements as a whole.
• D) a scope limitation has been imposed.

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Definitions:

Auditor Opinions

Formal statements made by an auditor based on an audit of a company's financial statements, indicating the level of reliability of the financial information.

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting used in any given jurisdiction, particularly in the United States.

Qualified Opinion

An assessment by an auditor indicating that there were some issues or exceptions found during the audit, but none were significant enough to impact the overall accuracy of the financial statements.

Reportable Segment

A distinguishable business unit or segment of an organization for which separate financial information is available and regularly reviewed by the company's management.