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16 June, 07:31

If $15,000 is considered to be material to the income statement, but $25,000 is material to the balance sheet, the auditor should set overall materiality at which of the following dollar amounts?

a. $20,000

b. $25,000

c. $40,000

d. $15,000

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Answers (1)
  1. 16 June, 09:10
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    The correct option is d.

    Explanation:

    It is given that $15,000 is considered to be material to the income statement, but $25,000 is material to the balance sheet.

    Material to the income statement = $15,000

    Material to the balance sheet = $25000

    The auditor should set overall materiality according to the income statement.

    The auditor should set overall materiality at $15,000.

    Therefore the correct option is d.
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