Assume a company with the following balance sheet accounts:Account AmountCash $10,000Fixed assets _______ 60,000$70,000Account AmountLong-term loans $30,000M. Johnson, proprietor _______ 40,000$70,000You are concerned only about overstatements of owner’s equity. Set performance materialityfor the three relevant accounts such that the preliminary judgment about materialitydoes not exceed $5,000. Justify your answer
Assume a company with the following balance sheet accounts:Account AmountCash $10,000Fixed assets _______ 60,000$70,000Account AmountLong-term loans $30,000M. Johnson, proprietor _______ 40,000$70,000You are concerned only about overstatements of owner’s equity. Set performance materialityfor the three relevant accounts such that the preliminary judgment about materialitydoes not exceed $5,000. Justify your answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Assume a company with the following
Account Amount
Cash $10,000
Fixed assets _______ 60,000
$70,000
Account Amount
Long-term loans $30,000
M. Johnson, proprietor _______ 40,000
$70,000
You are concerned only about overstatements of owner’s equity. Set performance materiality
for the three relevant accounts such that the preliminary judgment about materiality
does not exceed $5,000. Justify your answer
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