Assume that Rosanne Madden, CPA, is using 5% of net income before taxes, current assets, or current liabilities as her major guidelines for evaluating materiality. What qualitative factors should she also consider in deciding whether misstatements may be material?

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Business

Rayna Hunt

24 October, 15:57

Assume that Rosanne Madden, CPA, is using 5% of net income before taxes, current assets, or current liabilities as her major guidelines for evaluating materiality. What qualitative factors should she also consider in deciding whether misstatements may be material?

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Katelyn Navarro · Answer 1

The accompanying subjective components are to be considered for assessing materiality:

Errors that are minor may be material if there are plausible result emerging from the authoritative commitment.

Errors that are unimportant may be material in the event that they influence a pattern in the income.

Sum including the extortion are generally viewed as significant than accidental mistake proportional to the dollar sum.