According to the text, the first step in applying materiality to an audit is

A) To determine tolerable misstatement for each account balance.
B) To determine a materiality level for the overall financial statements.
C) To aggregate the misstatements found in each account and determine their overall affect on the financial statements.
D) To ask management what constitutes a material amount in their business.

Answer: B) To determine a materiality level for the overall financial statements.