Which of the Following Is Not a Qualitative Factor That

question 5

Multiple Choice

Which of the following is not a qualitative factor that may affect an auditor's establishment of materiality?

• A)Potential for fraud.
• B)The entity is close to violating loan covenants.
• C)Firm policy sets materiality at 5 per cent of pre-tax income.
• D)A small misstatement that would interrupt an earnings trend.

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Definitions:

Apprehension

A feeling of fear or anxiety about something that might happen, often involving worry about future events or outcomes.

Physical Tension

A state of physical unease or strain often resulting from stress or exercise.

Aggressive Dog

A dog that exhibits behaviors intended to threaten or harm, often as a result of fear, territoriality, or lack of socialization.

Amygdala

A region of the brain within the temporal lobe, involved in experiencing emotions, particularly fear and pleasure.