Question

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

Answer 1

The correct option is d.

Step-by-step 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.