7. Which of the following is not true regarding the preliminary judgment of materiality?

Please add checkmark next to the correct answer(s).

1It represents the largest amount of potential misstatement that would not affect the decision of a user.

2The preliminary judgment of material is based on applying an appropriate benchmark to an appropriate base.

3Determining the preliminary judgment does not require auditor judgment.

4Income before taxes is generally the appropriate benchmark for for-profit entities.

5Qualitative factors are important in the evaluation of materiality.