The Amount(s) Set by the Auditor at Less Than the Materiality

question 30

Multiple Choice

The amount(s) set by the auditor at less than the materiality for the financial statements as a whole to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole is referred to as

• A) the materiality range.
• B) the error range.
• C) tolerable materiality.
• D) performance materiality.

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Definitions:

Vertical Analysis

A method of financial statement analysis in which line items are expressed as a percentage of a base figure within the same period.

Ford Motor Company

A multinational automaker headquartered in the United States, known for producing and selling automobiles and commercial vehicles under the Ford brand and luxury cars under the Lincoln brand.

Horizontal Analysis

An analytical approach to finance, examining historical financial records from several periods to spot growth trends and patterns.

Vertical Analysis

A technique for examining financial statements by presenting each item in the main categories of accounts (assets, liabilities, and equity) on a balance sheet as a fraction of the overall category.