- 1 Marks
AA – L2 – SA – Q5.3 – Materiality
Question
Materiality is a matter of:
A Capacity
B Liquidity
C Profitability
D Judgment
Answer
D
Explanation:
Materiality in auditing involves professional judgment to determine the significance of misstatements in the context of the financial statements. It is not directly related to capacity, liquidity, or profitability, which are financial metrics. Option D is correct, as materiality requires the auditor to assess what influences users’ decisions.
- Tags: Audit Planning, ICAG, Materiality, Professional Judgment
- Level: Level 2
- Uploader: Salamat Hamid