Which of the following is not a method that the auditor might use to calculate materiality?
A)based on a decision rule that is a percentage of total sales
B)based on a decision rule that is a percentage of total expenses
C)based on a decision rule that is a percentage of pre-tax income or income from operations
D)based on a decision rule that is a percentage of total assets

Question

Quizplus · Accepted Answer

Materiality is typically based on a decision rule that is a percentage of a financial statement element that is considered relevant to the user of the financial statements (e.g. total assets, total revenues, etc.). Option B is not a commonly used financial statement element to base materiality on.

Which of the Following Is Not a Method That the Auditor