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:

Aspirin-Type Analgesic

A class of medication used to reduce pain, fever, inflammation, and, in some doses, to prevent blood clots, mainly characterized by the presence of acetylsalicylic acid.

Gastric Disorders

A range of conditions affecting the stomach, including gastritis, gastric ulcers, and gastric cancer, often leading to pain and digestion issues.

Regressive Tax

A tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases, disproportionally affecting those with lower incomes.

Represent

To stand in for or symbolize something; in data and models, to depict or embody a concept, group, or physical entity.