Does the concept of materiality mean that financial statementsare not precise, down to the last dollar? Does this concept makefinancial statements less useful to most users?

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19 May 2022

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17 Apr 2019

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Related questions

Materiality:

1) What is materiality and why is difficult to apply the concept?

2) As an auditor, how do you identify who the primary users of the entityâs financial statements are, and the information those users need to find in the financial statements?

3) What factors should be considered in deciding whether information is material or not?

4) How is the presentation (e.g. aggregation/ disaggregation) of information influenced by materiality and vice versa?

5) During the course of an audit, both quantitative as well as qualitative misstatements need to be considered. Give four examples of qualitative misstatements.

ceriselizard911

Go to the FASB website and access the FASB Concepts Statementsand use the IASB website to respond to the following items.(Provide paragraph citations.) When you have accessed thedocuments, you can use the search tool in your Internet browser.Explain how "materiality" is defined by both FASB and IASB. Theconcepts statements provide several examples in which specificquantitative materiality guidelines are provided to firms. Identityat least two of these examples. Do you think the materialityguidelines should be quantified? Why or why not? The conceptsstatements discuss the concept of "articulation" between financialstatement elements. Briefly summarize the meaning of this term andhow it relates to an entity's financial statements

sapphirebeetle594

Quest. 1

The management of Star processing company Ltd has met to reviewlast year's financial statements and use it as the basis for theactivities of this year. After the presentation by the financialcontroller, the chief executive officer who was the chairman ofmeeting retorted that the financial statements are for theconsumption of the management and employees of the company.Assuming you were the marketing manager for this company andpresent at the meeting.

Required: a)State the other parties interested in the financialstatements and identify one(1) user need for each interestedparty.

Quest. 2

The observation of the following concepts is presumed infinancial statement unless otherwise stated

(i). Going concern concept

(ii). Accruals concept

(iii). Business entity concept (iv). Prudence concept

(v). Historical cost concept Required:

a. Explain each of the above concept giving examples of how eachis observed in the conventional financial statement.

b. Give or list two drawbacks of each of the above concept.

c. Name and explain briefly the four qualitative characteristicsof accounting information that make financial statements useful tousers.

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