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:

Visuals

Images, diagrams, charts, and other graphical elements used in documents or presentations to illustrate, clarify, or add interest to the information being conveyed.

Rough Draft

A Rough Draft is an early version of a written document, used for brainstorming and organizing ideas before producing a final version.

Compactly

In a manner that uses space efficiently, often referring to the concise and effective arrangement of information or objects.

Common Scale

A standardized measurement or grading system used to compare different items or phenomena on the same basis.