When allocating materiality, most practitioners choose to allocate to
A) the income statement accounts because they are more important.
B) the balance sheet accounts because most audits focus on the balance sheet.
C) both balance sheet and income statement accounts because there could be errors on either.
D) all of the financial statements because it is required by GAAS.

Question

Quizplus · Accepted Answer

Most practitioners allocate materiality to balance sheet accounts because audits often focus on the balance sheet, where misstatements can have a more direct impact on the financial position of the entity.

When Allocating Materiality, Most Practitioners Choose to Allocate to