Which of the Following Is a Correct Statement Regarding Materiality

question 78

Multiple Choice

Which of the following is a correct statement regarding materiality?

• A) There are well-defined guidelines that enable auditors to determine if something is material.
• B) Misstatements must be compared with some benchmark before a decision can be made about the materiality level of the failure of a company to follow GAAP.
• C) Pervasiveness is not considered when comparing potential misstatements with a base or benchmark.
• D) To evaluate overall materiality, the auditor does not combine all unadjusted misstatements.

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Definitions:

Favorable Supply Shock

An unexpected event that increases the supply of a product or service, leading to lower prices and benefiting consumers.

Price Level

A measure of the average prices of goods and services in an economy.

Central Bank

A national bank that provides financial and banking services for its country's government and commercial banking system and implements monetary policy.

Money Supply

The whole sum of economic financial assets at a specified time.