AA – L2 – SA – Q5.3 – Materiality

Materiality is a matter of:

 Capacity

 Liquidity

 Profitability

 Judgment

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.