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The total value for receivables in a statement of financial position is $100,000. The total value for sales in the income statement is $1m. Two debts of $4,000 each (A and B) are considered by the auditors to be bad but the client refuses to write them off. Sales and receivables are overstated in respect of one transaction (C) by $5,000. Which of the following statements are fair in respect of the materiality of these items? A. A, B and C are individually material to both sales and receivables. B. It is necessary to consider all misstated items, both individually and in aggregate in calculating materiality. C. None of these items either collectively or individually are material to either sales or receivables. D. Each item should be taken individually. None of the three items individually is material to sales or receivables and it is not necessary to consider them collectively. E. A, B and C, taken collectively, are material to receivables, but they are not material to sales. |