Correct Answer:
C. Influence the economic decisions of users taken on the basis of the financial statements
Materiality is judged by whether users' economic decisions could be influenced.
November 13, 2026 · Accounting and Finance MCQs, Auditing MCQs
Information is considered material if its omission or misstatement could:
Related MCQs
Under the ISAs, analytical procedures are required to be performed at which stages of the audit?
A.
Only when fraud is suspected
B.
Only during the interim visit
C.
Risk assessment and the overall review near the end of the audit
D.
Only for listed companies
Correct answer is:
C. Risk assessment and the overall review near the end of the audit
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A major limitation of the payback period method is that it:
A.
Is too complicated to calculate
B.
Uses discounted cash flows
C.
Ignores the time value of money and cash flows after the payback period
D.
Considers all cash flows over the project life
Correct answer is:
C. Ignores the time value of money and cash flows after the payback period
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A positive externality is:
A.
A benefit received by third parties who did not pay for it, such as from vaccination
B.
A cost imposed on third parties
C.
A tax on producers
D.
A government subsidy
Correct answer is:
A. A benefit received by third parties who did not pay for it, such as from vaccination
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Tax-to-GDP ratio is calculated as:
A.
GDP divided by tax revenue
B.
Total revenue divided by total expenditure
C.
Tax revenue divided by GDP, expressed as a percentage
D.
Public debt divided by GDP
Correct answer is:
C. Tax revenue divided by GDP, expressed as a percentage
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Annual demand is 3,600 units, ordering cost is Rs. 100 per order and holding cost is Rs. 8 per unit per year. The EOQ is:
A.
300 units
B.
600 units
C.
450 units
D.
90 units
Correct answer is:
A. 300 units
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The date of the auditor's report should be:
A.
The first day of the financial year
B.
No earlier than the date on which the auditor obtained sufficient appropriate evidence to support the opinion
C.
The date of the annual general meeting only
D.
Any date chosen by management
Correct answer is:
B. No earlier than the date on which the auditor obtained sufficient appropriate evidence to support the opinion
Do you agree with this answer?
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