When Determining Materiality

question 35

Multiple Choice

When determining materiality,

• A) the preliminary judgment about materiality can be increased, but not decreased during the audit.
• B) auditing standards provide specific materiality guidelines to practitioners.
• C) only one benchmark can be used.
• D) the application of guidelines requires considerable professional judgment.

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Definitions:

Cash Contributions

Monetary gifts made by individuals or organizations to entities such as companies, nonprofits, or trusts, often for specific purposes or projects.

Donated Goods

Items given to an organization at no cost, often recognized in the recipient's financial records as income or an asset.

Operating Purposes

Refers to the activities and expenditures directly related to the day-to-day functions of running a business, excluding financing and investment activities.

Charity Care

Healthcare services provided for free or at a reduced cost to individuals unable to pay.