Chapter 8, Problem 27.1MCQ

Which one of the following statements is correct concerning the concept of materiality?

1. (1) Materiality is determined by reference to guidelines established by the AICPA.
2. (2) Materiality depends only on the dollar amount of an item relative to other items in the financial statements.
3. (3) Materiality depends on the nature of an item rather than the dollar amount.
4. (4) Materiality is a matter of professional judgment.