Materiality of information is important for financial and managerial accounting. There is not one amount set...
Materiality of information is important for financial and managerial accounting. There is not one amount set aside for materiality in specific situations. How do you think a manager would determine materiality levels for their organization?
Homework Answers
Materiality
Materiality is the threshold above which missing or incorrect information in financial statement is considered to have an impact on decision making of users.the party responsible for auditing the statement is concerned about that much than the manager of the organisation. materiality level is different for each organisation ,it is decided based on net impact on reported profits ,or the percentage of dollar change.auditors must have a materiality figure or level before auditing the statement.
the financial management and auditor ,determine the threshold level of materiality requires that an appropriate base levl and percentage be decided on.different benchmark are used to find the materiality base.this can be earnings,revenue,total assets and debt/equity.the most commonly used> 10% material and 5-10% requires judgment).this level is decided based on the organisation.
so,materiality level of the organisation is decided based on any major Base and a percentage is decided on that.any amount exceeding the percentage is considered as material and further examination is needed for that.also,meteriality level of organisation is decided based on the sector and risk involved in the organisation.
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Materiality of information is important for financial and
managerial accounting. There is not one amount set...
WEEK 4: MANAGERIAL ACCOUNTING Both financial and managerial accounting are important to a company’s success. Which...
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