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:

Critiquing

Critiquing refers to the practice of analyzing and evaluating something critically, often to identify its strengths and weaknesses or to provide constructive feedback.

Laissez-faire

An economic philosophy of free-market capitalism that opposes government intervention.

Reciprocal

involving mutual exchange or sharing between two or more parties.

Authoritarian

Characterizing a system of government or leadership where control is held by a single ruler or small group, often lacking democratic participation or personal freedoms.