Since materiality is relative,it is necessary to have benchmarks for establishing whether misstatements are material.Normally,the most important base for deciding what is material,because it is regarded as a critical item of current period information for users,is
A)total assets.
B)net income.
C)net working capital.
D)net income before taxes.

Question

Quizplus · Accepted Answer

Net income before taxes is often used as a benchmark for materiality because it reflects the company's profitability and is a critical measure for users assessing financial performance.

Since Materiality Is Relative,it Is Necessary to Have Benchmarks for Establishing