An Item Is Considered Material If

question 139

Multiple Choice

An item is considered material if

• A)it does not cost a lot of money.
• B)it is of a tangible good.
• C)its size is likely to influence the decision of an investor or creditor.
• D)the cost of reporting the item is greater than its benefits.

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Definitions:

Organization Expenses

Costs incurred in the formation of a corporation, partnership, or other business entity, typically including legal and registration fees.

Paid-in Capital

The amount of money that a company has received from shareholders in exchange for shares of stock, beyond the par value of the shares.

Retained Earnings

The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders, often used for reinvestment in the business or to pay off debt.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often with fixed dividends.