Lewis corporation has a few large accounts receivable

13) Lewis Corporation has a few large accounts receivable that total one million dollars whereas
Clark Corporation has many small accounts receivable that total one million dollars.
Misstatement in any one account is more significant for Lewis corporation because of the
concept of:
A) materiality.
B) audit risk.
C) reasonable assurance.
D) comparative analysis.
1) When auditors allocate the preliminary judgment about materiality to account balances, the
materiality allocated to any given account balance is referred to as:
2) Auditors generally allocate the preliminary judgment about materiality to the:
3) Which of the following is an incorrect statement regarding the allocation of the preliminary
judgment about materiality to balance sheet accounts?
4) 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) Preliminary materiality is required by the SEC.

D) The PCAOB term used when preliminary materiality is allocated to segments is
tolerable misstatement.
5) Which of the following statements is false?