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Afternoon,
There are instances where items can be immaterial to the SOFP but material In the income statement, for eg. Bad debts can be 0.5% of total assets but can constitute of 50% to PBT. How can we go about this dilemma
Thanks in Advance
Use three different benchmarks to measure materiality
For something like provisions for doubtful debts (allowances for receivables) or bad debt write offs you would measure against assets and profits but not against revenue
For other matters like pre-invoicing / cut-off you would measure against revenue and profits
That help?
Mike what you think. which question will be less tricky to done in exam. 5th Reporting OR 3rd Audit Evidence?
What a strange question!
It’s strange because not only do I have no thoughts at all on the matter but also because you seem to think that I could know!
If you’ve ever watched the television programme “Who wants to be a millionaire?” you would have heard the game show host (at least, in the UK) say …..
“The questions are only easy if you know the answers”
If you know the topic in question 5 better than the topic in question 3, then question 5 should be easier
However, if you know the topic in question 3 better than the topic in question 5, then question 3 should be easier
Just beware! You may think that you know the topic in, say, question 5 better than that in question 3 but just make totally sure that you are reading the question as it is set and not wandering carelessly into the oft-occurring fault of misinterpreting exactly what is required by the question
OK?
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