Question: Distinguish between the terms performance materiality and preliminary judgment about materiality. A preliminary judgment about materiality is set for the financial statements as a whole.

Distinguish between the terms performance materiality and preliminary judgment about materiality.

A preliminary judgment about materiality is set for the financial statements as a whole. Performance materiality is the maximum amount of misstatement that would be considered material for an individual account balance.

Performance materiality is where the auditor can determine the amount of the misstatement for the income statement. A preliminary judgment about materiality is set for the sales account as a whole.

Performance materiality is used to determine which types of misstatements are likely to be more important to users than others, even if the dollar amounts are the same. A preliminary judgment about materiality is the maximum amount of misstatement that would be considered material for an individual account balance.

Performance materiality is set for the financial statements as a whole. A preliminary judgment about materiality is the maximum amount of misstatement that would be considered material for an individual account balance.

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