Auditors commonly allocate materiality to balance sheet accounts rather than income statement accounts because most income statement misstatements have a(n) ________ effect on the balance sheet.
A) increased
B) equal
C) reduced
D) undetermined

Question

Quizplus · Accepted Answer

Most income statement misstatements have an equal effect on the balance sheet because they affect both the income statement and the retained earnings on the balance sheet.

Auditors Commonly Allocate Materiality to Balance Sheet Accounts Rather Than