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:

Dependent Means

Pertains to a statistical analysis involving paired or matched samples, comparing the means between two related groups.

Directional Hypothesis

A hypothesis that predicts not only a relationship but also the direction of the relationship between two variables or groups.

Alpha

A threshold value used in statistics to determine the significance level below which a null hypothesis is rejected in a hypothesis test.

Non-directional Hypothesis

A hypothesis that specifies there is a difference or relationship, but not the direction of the difference or relationship between variables.