Which Statement Is True Concerning Materiality

question 45

Multiple Choice

Which statement is true concerning materiality?

• A)Misstatements are material if they could reasonably be expected to influence the decisions of users of the financial statements.
• B)Materiality guidelines are specifically prescribed by the PCAOB.
• C)Materiality is not a useful concept in assessing internal control effectiveness.
• D)Materiality is a concept applied to financial statement presentation but not to disclosures.

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Definitions:

Expected Value

A statistical concept that calculates the average result when the same event is repeated multiple times.

High-Value

Refers to products, services, or assets that possess significant worth or importance, often attracting premium prices.

Low-Value

Refers to products, services, or transactions that possess minimal worth in terms of price, importance, or usefulness to the buyer.

Second-Price Auction

A bidding process where the highest bidder wins but pays the second-highest bid price.