The concept of materiality refers to ________.
A)any misstatement in the financial statements
B)the overall degree of risk in an organization
C)an amount of misstatement that could affect the decisions of a financial statement user.
D)an amount of risk in an organization sufficient to offset the expected returns of any investment in the company

Question

Quizplus · Accepted Answer

Materiality refers to the amount of misstatement in the financial statements that could affect the decisions of a financial statement user. Materiality is a relative concept and depends on the nature of the item or transaction, the size of the entity, and the user's perspective. Materiality is a key concept in auditing and determines the extent of audit procedures and the nature of audit evidence required to support the financial statements.

The Concept of Materiality Refers to ________