The North Face case deals with materiality and how auditors employ that metric in an audit. The following are all true except:
A) North Face accounted for barter transactions with full normal margin recognized
B) Crawford devised the 1997 barter transaction so that it was just beneath the materiality threshold
C) Crawford followed the GAAP methods that Deloitte suggested
D) Deloitte proposed an adjusting entry for the 1997 barter transaction, but "passed" on it as immaterial

Question

Quizplus · Accepted Answer

Crawford did not follow the GAAP methods that Deloitte suggested, which is what makes this statement false. The case highlights issues with materiality and accounting practices, but Crawford's actions deviated from GAAP recommendations.

The North Face Case Deals with Materiality and How Auditors