The Materiality Constraint

question 277

Multiple Choice

The materiality constraint:

• A)Prescribes that accounting information is based on actual cost.
• B)Provides guidance on when a company must recognize revenue.
• C)Prescribes that only information that would influence the decisions of a reasonable person need be disclosed.
• D)Prescribes that a company record the expenses it incurred to generate the revenue reported.
• E)Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.

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Definitions:

Formal Authority

Official power given to an individual or group by an organization's rules or hierarchy to make decisions and direct others.

Follower

An individual who supports and is guided by another person or entity, often within a leadership context.

Leader Effectiveness

Leader effectiveness is the measure of a leader's ability to achieve desired results, fulfill organizational goals, and successfully manage and motivate their team or followers.

Quality

The degree to which a product, service, or process meets specified standards or fulfills customer expectations.