A Material Error Is One That, If Not Corrected, Would

question 65

True/False

A material error is one that, if not corrected, would impact a user's decisions.

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Definitions:

Direct Method

A way of preparing a cash flow statement where actual cash flows from operating activities are reported instead of adjusting net income for non-cash items.

Prepaid Expenses

Future expenses that have been paid in advance and are accounted for as assets on a balance sheet until they are incurred.

Accrual Basis

An accounting method that records revenues and expenses when they are earned or incurred, regardless of when the cash is actually exchanged.

Accounts Receivable

Amounts due to a company from its clients for the supply of goods or services, which have yet to be paid for.