Calculate preliminary materiality

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Reference no: EM132000301

Question - Following are extracts from the annual financial statements:


2012

2011

2010





Cash

$99,000

$110,000

$124,000

Accounts receivable

$320,000

$220,000

$150,000

Fixed assets (net)

$15,000

$20,000

$25,000





Accounts payable

$270,000

$180,000

$150,000

Bank indebtedness

$100,000

$25,000

$0





Share capital

$200,000

$200,000

$200,000





Revenue

$625,310

$538,120

$507,380

Cost of sales

$406,452

$333,634

$304,428





Administration expenses

$89,000

$57,000

$58,000

Sales expenses

$31,266

$21,525

$20,295

Amortization

$5,000

$5,000

$5,000

Calculate preliminary materiality. Justify your decision of materiality base and choice of materiality.

Reference no: EM132000301

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