Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Textbook Question
Chapter 8, Problem 25.1MCQ
Which one of the following statements is correct concerning the concept of materiality?
- (1) Materiality is determined by reference to guidelines established by the AICPA.
- (2) Materiality depends only on the dollar amount of an item relative to other items in the financial statements.
- (3) Materiality depends on the nature of an item rather than the dollar amount.
- (4) Materiality is a matter of professional judgment.
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Comment on the statement that materiality is in the eye of the beholder. How does this statement relate to the discussion in this chapter of how to gauge materiality in assessing financial statement restatements? Is materiality inconsistent with the notion of representational faithfulness?
With respect to the concept of materiality, which of the following statements is correct?a. Materiality depends only on the dollar amount of an item relative to other items in the financial statements.b. Materiality depends on the nature of a transaction rather than the dollar amount of the transaction.c. Materiality is determined by reference to AICPA guidelines.d. Materiality is a matter of professional judgment.
Materiality arises when a misstatement in the financial statements could affect a decision of areasonable user of the statements.Explain the levels of materiality used for determining the type of opinion.
Chapter 8 Solutions
Auditing And Assurance Services
Ch. 8 - Prob. 1RQCh. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - Prob. 4RQCh. 8 - Prob. 5RQCh. 8 - Prob. 7RQCh. 8 - Prob. 8RQCh. 8 - Prob. 9RQCh. 8 - Prob. 10RQCh. 8 - Prob. 11RQ
Ch. 8 - Prob. 12RQCh. 8 - Prob. 13RQCh. 8 - Your client, Harper Company, has a contractual...Ch. 8 - Prob. 15RQCh. 8 - Prob. 16RQCh. 8 - Prob. 17RQCh. 8 - Prob. 18RQCh. 8 - Prob. 19RQCh. 8 - Prob. 20RQCh. 8 - Prob. 21RQCh. 8 - Prob. 22RQCh. 8 - Prob. 23.1MCQCh. 8 - Prob. 23.2MCQCh. 8 - Prob. 23.3MCQCh. 8 - Prob. 24.1MCQCh. 8 - Prob. 24.2MCQCh. 8 - Prob. 24.3MCQCh. 8 - Which one of the following statements is correct...Ch. 8 - Prob. 25.2MCQCh. 8 - Prob. 25.3MCQCh. 8 - Prob. 26.1MCQCh. 8 - Prob. 26.2MCQCh. 8 - Prob. 26.3MCQCh. 8 - Prob. 27DQPCh. 8 - Prob. 28DQPCh. 8 - Prob. 32DQPCh. 8 - Prob. 33DQPCh. 8 - Prob. 34DQPCh. 8 - Prob. 35DQP
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which is NOT a criteria for recognition of financial information in the IFRS Conceptual Framework? A) The item is measurable without a high degree of uncertainty B) The amount must be measured at historical cost. C) The item provides relevant information about the element D) The item provides a faithful representation of the element.arrow_forwardHow can a misstatement in one financial statement, whether intentional or not, affect a presentation in another financial statement?arrow_forwardWhat terms can be used to express an unmodified opinion on financial statements prepared in accordance with a fair presentation framework? a. Present fairly, in all material respects O b. Financial statements are materially misstated and pervasive O c. Subject to O d. With the foregoing explanationarrow_forward
- Which of the following would not overstate current-period net income?a. Capitalizing an expenditure that should be expensed.b. Failing to record a liability as an expense.c. Failing to record a check paying an item in Vouchers Payable.d. All of the above would overstate net income.arrow_forwardWhen an event impacts a financial statement element, it should be recognized in the accounting records even if reliability of the amount is questionable. True Falsearrow_forwardOn the basis of accountants’ heuristics and biases, how are accounting judgements regarding internally generated intangible influenced?arrow_forward
- The statement of financial position Select one: a. Makes very limited use of judgments and estimates. b. Uses fair value for most assets and liabilities. C. All of the choices are correct regarding the statement of financial position. d. Omits many items that are of financial value.arrow_forwardThe main steps required in the preparation of a restated statement of financial position (in accordance with the requirements of IAS29) do not include: The restatement of non-monetary items carried at historical cost The restatement of monetary items The restatement of each component of equity The restatement of non-monetary items carried at a valuationarrow_forwardWhich of the following is not a criterion that must be met for an item to be classified as a liability? A certain cash payment will occur in the future. A sacrifice will require the entity’s assets or services. There is a probable future sacrifice. There is a present obligation that results from a past transaction.arrow_forward
- Which one of the following recognises the idea that assets and income should not be overstated while liabilities and expenses should not be understated :A. Matching principle,B. Accrual concept,C. Principle of prudence.D. Consistency concept.arrow_forwardWhich of the following is FALSE regarding the financial statements?arrow_forwardWhich of the following statements about IFRS and GAAP accounting and reporting requirements for the balance sheet is not correct? a. Both IFRS and GAAP distinguish between current and non-current assets and liabilities. b. The presentation formats required by IFRS and GAAP for the balance sheet are similar. c. Both IFRS and GAAP require that comparative information be reported. d. One difference between the reporting requirements under IFRS and those of the GAAP balance sheet is that an IFRS balance sheet may list long-term assets first.arrow_forward
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