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.