When Allocating Materiality, Most Practitioners Choose to Allocate To

question 94

Multiple Choice

When allocating materiality, most practitioners choose to allocate to:

• A) the income statement accounts because they are more important.
• B) the balance sheet accounts because there are fewer.
• C) both balance sheet and income statement accounts because there could be errors on either.
• D) all of the financial statements because it is required by GAAS.

---

Definitions:

Management & Budget

Involves the process of planning, organizing, directing, and controlling financial resources to achieve organizational objectives.

External Awareness

The understanding and consideration of external factors and environments that could impact decisions or actions.

Supervision

The action of overseeing and directing work or tasks, generally involving guidance, support, and monitoring of performance.

Theory Y

Assumes that employees can view work as being as natural as rest or play, and therefore, people will exercise self-direction and self-control if they are committed to the objectives.