An Item Is Considered Material If

question 21

Multiple Choice

An item is considered material if

• A) It doesn't cost a lot of money.
• B) It is of a tangible good.
• C) It is likely to influence the decision of an investor or creditor.
• D) The cost of reporting the item is greater than its benefits

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Definitions:

Diminishing Marginal Returns

A principle stating that as additional units of a variable input are added to a fixed input, the additional output produced from each new unit will eventually decrease.

Normal Profit

The minimum level of profit needed for a company to remain competitive in the market, covering its opportunity costs.

Entrepreneur's Potential Earnings

The hypothetical income an entrepreneur could earn, considering the risks and opportunities associated with starting and running a business.

Annual Lease

A contract or agreement stipulating the rental terms of a property for one year, often specifying the rent amount, payment schedules, and other conditions.