Day: September 11, 2025

For each of the following statements about materiality, select whether they are true or false.

Statement 1 – Materiality may depend on the size of the error in the context of its omission or misstatement.

Statement 2 – Materiality should be considered when planning audit procedures and when evaluating discovered misstatements.

Statement 3 – Materiality is always expressed as a proportion of profits.

Identify whether the statements made above are true or false?

Select ONE answer:

1. Statement 1. True and Statement 2. False and Statement 3. False
2. Statement 1. False and Statement 2. False and Statement 3. True
3. Statement 1. True and Statement 2. True and Statement 3. False
4. Statement 1. False and Statement 2. True and Statement 3. True

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == > Statement 1 is True as the concept of materiality does not exist in a void, but depends on the context of the omission or misstatement. Statement 2 is True as materiality acts as a form of guidance in the amount of work required to be performed, and so when planning audit procedures — > It is also referred to in evaluating discovered misstatements (both individual misstatements and in aggregate). Statement 3 is False as materiality is not a fixed percentage of profits or other measure but depends on the audit risks faced for the particular client — > Further, materiality is not only measured quantitatively but also qualitatively.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.