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1 DIJU Pall 2019 1. Consider the following statements: 1. Clearly trivial and not material are terms that can be used interchangeably. II. The lower the dollar amount of Inerformance) materiality the less audit evidence is required. a. I is true; Il is true b. I is true; Il is false C. I is false; Il is true d. I is false; II is false 2. Consider the following statements: 1. Per auditing standards, the successor Inewl audit firm is required to initiate communication with the predecessor (old) audit firm. II. The predecessor auditor might communicate, to the successor auditor, information related to client management's integrity. a. I is true; Il is true b. I is true; Il is false c. lis false; Il is true d. I is false; Il is false 3. "A letter that formalizes the contract between the auditor and the entity and outlines the responsibilities of both parties" is referred to as a(n): a audit letter. b. contact letter. C. engagement letter. d. management letter. 4. Certain accounts and transactions affect both the Income Statement and the Balance Sheet. If $15,000 is considered to be material to the income statement, but $25,000 is material to the balance sheet, the auditor should set overall materiality at which of the following dollar amounts? a. $15,000 b. 25,000 C. 40,000 d. None of the above. The answer is 5. Which of the following best describes the amount of misstatement an auditor is willing to accept and still not say the account balance is materially misstated? a. Tolerable misstatement. b. Overall financial statement materiality c. A clearly trivial amount d. Significant materiality