Which of the Following Is a Correct Statement Regarding Performance

question 108

Multiple Choice

Which of the following is a correct statement regarding performance materiality?

• A) Determining performance materiality is necessary because auditors accumulate evidence by segments.
• B) The level of performance materiality does not affect the amount of evidence needed.
• C) Performance materiality cannot vary for different classes of transactions.
• D) Performance materiality is required for public companies, but not for private companies.

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Definitions:

Par Value

The face value of a bond or stock, as stated by the issuing company, which may differ from its market value.

Stock Issuance Costs

The expenses related to issuing new stocks, including legal, accounting, and underwriting fees.

New Shares

New shares refer to additional stocks issued by a company either through public offerings or rights issues to existing shareholders, which can dilute current ownership percentages.

Consolidated Receivables

The aggregation of all receivables or money owed by customers to a company, combined from all its divisions or subsidiaries for reporting purposes.