The Benefits of Reporting Financial Information Must Exceed the Costs

question 58

Multiple Choice

The benefits of reporting financial information must exceed the costs of doing so,according to which characteristic of financial information?

• A)the concept of materiality
• B)faithful representation
• C)cost constraint
• D)verifiability

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Definitions:

Material Misrepresentation

A statement that is significantly untrue or misleading and, if known to be such, could have influenced the decision-making of a party in a contract or agreement.

Voidable

A legal term describing a transaction or agreement that is valid but may be annulled by one of the parties involved.

Statute of Limitations

A law which sets out the maximum period one can wait before filing a lawsuit, depending on the type of case or claim.

Unenforceable

A term that describes a contract or clause that, due to certain defects or legal principles, cannot be legally compelled or enforced by a court.