Chapter 8, Problem 35DQP

a.

To determine

Identify the factors that Person L should consider in setting performance materiality for the asset accounts.

b.

To determine

Describe the reason for setting performance materiality of cash at the lowest amount. 

c.

To determine

Describe the reason why Person L set performance materiality for inventory at a lower amount as compared to accounts receivable, PP&E, and other assets.

d.

To determine

Describe the reason why Person L set performance materiality for accounts receivable at the highest amount.

e.

To determine

Describe whether setting materiality at a lower level result in collecting more or less audit evidence.