Companies Must Follow Both the Matching Principle and the Materiality

question 125

True/False

Companies must follow both the matching principle and the materiality principle when considering the use of the direct write-off method.

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Definitions:

Long Run

A period in which all inputs can be adjusted, allowing firms to change their production capacity and industries to enter or exit markets.

Perfect Competitor

A theoretical firm in a perfectly competitive market where it is a price taker, and there are no barriers to entry or exit.

Long Run

A time frame where all production elements and expenses can change, enabling companies to modify all resources.

Optimum Efficiency

The most favorable condition where resources are used in the best possible way to achieve maximum productivity and economic benefits.