6. The preliminary judgment about materiality and the amount of audit evidence accumulated are A) directly B) indirectly C) not D) inversely 7. Which of the following statements is not correct? A) Materiality is a relative rather than an absolute concept B) The most important base used as the criterion for deciding materiality is total assets. C) Qualitative factors as well as quantitative factors affect materiality D) Given equal dollar amounts, frauds are usually considered more important than errors 8. Statements on Auditing Standards provide detailed, objective guidance on how auditors are to establish a preliminary materiality level, thus eliminating the need for subjective auditor judgment in this task. A) True B) False Which of the following statements is true concerning the allocation of preliminary materiality? A) It is necessary to allocate preliminary materiality to financial statements as a whole rather than by segments. B) Preliminary materiality should be allocated to income statement accounts only C) It is required by the SEC 9. preliminary materiality is allocated to segments it is termed tolerable misstatement 10. Which of the following statements is false? A) Either an overstatement of an asset account or an understatement of a liability account would have the same effect on the income statement. B) A misclassification in the balance sheet will have no effect on operating income. C) Either an overstatement of an asset account or an overstatement of a liability account would have the same effect on the income statement. D) Either an understatement of an asset account or an overstatement of a liability account would have the same effect on the income statement. misstatements are those where the auditor can determine the amount of the misstatement in the account. A) Potential B) Likely C) Known D) Projected 2. The risk that audit evidence for a segment will fail to detect misstatements exceeding tolerable misstatement is: A) Audit risk