The Auditors Must Consider Materiality in Planning an Audit Engagement

question 19

Multiple Choice

The auditors must consider materiality in planning an audit engagement.Materiality for planning purposes is:

• A)The auditors' preliminary estimate of the largest amount of misstatement that would be material to any one of the client's financial statements.
• B)The auditors' preliminary estimate of the smallest amount of misstatement that would be material to any one of the client's financial statements.
• C)The auditors' preliminary estimate of the amount of misstatement that would be material to the client's balance sheet.
• D)An amount that cannot be quantitatively stated since it depends on the nature of the item.

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Definitions:

Hippocampus

An area in the brain linked to the development of memory and the ability to find one's way through space.

Fraternal Twins

Twins that develop from two separate eggs fertilized by different sperm cells, sharing about 50% of their DNA, similar to regular siblings.

Identical Twins

Identical twins result from a single fertilized egg splitting and developing into two individuals with exactly the same genetic material.

Intelligence

The ability to learn from experience, adapt to new situations, understand and handle abstract concepts, and use knowledge to manipulate one's environment.