Auditing and EthicsMCQQuestion 13207 of 300
All Questions

The amount set by the auditor at less than materiality for the financial statements as a whole to reduce to an appropriately low level the probability that uncorrected misstatements exceed materiality is defined as:

Select Your Answer (Keyboard: A, B, C, D)
For any discrepancies in this question, email contact@cadada.in

Correct Answer

✅ Option D — Performance Materiality

All Options:

  • ASampling Risk
  • BBenchmark Materiality
  • CTolerable Error
  • DPerformance Materiality ✓

Detailed Solution & Explanation

Correct Answer: Option **D** (Performance Materiality) **Auditing Standard / Ethical Provision (SA 320 - Materiality in Planning and Performing an Audit):** SA 320 defines Performance Materiality as the amount or amounts set by the auditor at less than materiality for the financial statements as a whole. Hence, Option D is the correct answer.

Key Concepts to Understand

Set

A well-defined collection of distinct objects (called elements or members). Sets are denoted by capital letters and elements are listed within curly braces. Key operations include Union (∪), Intersection (∩), and Complement.

Probability

A numerical measure of the likelihood of an event occurring, expressed as a number between 0 (impossible) and 1 (certain). Formula: P(A) = Number of favorable outcomes / Total number of equally likely outcomes.

More Questions from Auditing and Ethics

According to SA 210, 'Agreeing the Terms of Audit Engagements', which of the following is a 'Precondition for an Audit' that the auditor must establish before accepting the audit engagement?

11. The method suggested by second team member in which a complete and exhaustive description of internal control in operation is recorded. This method is known as

14. Which of the following statement is incorrect with regard to written representations?

7. Mr. E, an Articled Clerk, was not sure about which items should be considered as intangible assets in PQ Ltd. According to AS-26, which of the following items should not be recognized as intangible assets? (I) Internally generated Goodwill (II) Compact disk in the case of computer software (III) Copyrights (IV) Computer software for computer-controlled machine tools that cannot operate without that specific software, which is an integral part of the related hardware.

10. The method suggested by first team member according to which, a series of instructions and/or questions which a member of the auditing staff must follow and/or answer. When he completes instruction, he initials the space against the instruction. This method is called as

13. ABC Ltd. is undergoing an audit, and the auditors are evaluating the reliability of different types of audit evidence. External evidence is generally considered to be more reliable than internal evidence. The following is NOT an example of internal evidence:

Ready to Master Auditing and Ethics?

Practice all 300 questions with instant feedback, earn XP, track your streaks, and ace your CA Intermediate exam.

Start Practicing — It's Free