If an Auditor Were to Use 5% of Income Before

question 25

Multiple Choice

If an auditor were to use 5% of income before taxes as a basis for materiality,it would be an example of judgment based on ________.

• A)absolute size
• B)relative size
• C)nature of the item
• D)cumulative effects

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Definitions:

Depression

A mental health disorder characterized by persistently depressed mood or loss of interest in activities, causing significant impairment in daily life.

Upsetting Events

Incidents or occurrences that cause emotional distress, anxiety, or trauma.

Antisocial Personality Disorder

A mental disorder characterized by a long-term pattern of disregard for, or violation of, the rights of others.

Childhood To Adulthood

The transitional phase of human development that encompasses physical, psychological, and social changes from infancy through puberty to independence.