Bases are needed for evaluating materiality. If you used current liabilities or current assets, what minimum percentage would you use for planning materiality?

Question

Quizplus · Accepted Answer

According to auditing standards, the minimum percentage to be used for planning materiality should be 5% of the relevant base. Using current liabilities or current assets as a base, 5% would be the appropriate minimum percentage for determining materiality. Choice A (10%) and C (1%) are too high and too low, respectively, and are not consistent with auditing standards.

Bases Are Needed for Evaluating Materiality