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Qualitative Factors Can Affect an Auditor's Assessment of Materiality

question 105

Multiple Choice

Qualitative factors can affect an auditor's assessment of materiality.Which of the following statements is true?
I.Misstatements that are otherwise immaterial may be material if they affect earnings trends.
II.Misstatements that are otherwise minor may be material if there are possible consequences arising from contractual obligations.


Definitions:

Health Maintenance Organizations

A type of health insurance plan that provides a network of doctors and hospitals for patient care, often with an emphasis on prevention and wellness.

Lower Wages

Reduced compensation for work performed, often relative to previous levels or compared to industry standards.

Unions

Organizations of workers that try to raise wages and improve working conditions for their members by bargaining collectively.

Marginal Product of Labor

This refers to the additional output a firm gains from hiring one more unit of labor, holding all other factors constant.

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