Question 1
Which of the following is the primary basis used to decide materiality for a profit-oriented entity?
◦ net sales
◦ net assets
◦ net income before tax
◦ All of these
Question 2
Which of the following statements is
not correct?
◦ Materiality is a relative rather than an absolute concept.
◦ The most important base used as the criterion for deciding materiality is total assets.
◦ Qualitative factors as well as quantitative factors affect materiality.
◦ Given equal dollar amounts, frauds are usually considered more important than errors.