Which of the Following Items Would Most Likely Be a Violation

question 40

Multiple Choice

Which of the following items would most likely be a violation of the materiality constraint?

• A) A company did not separately report an unusual gain of $100,000. Its income from operations was $20,000,000.
• B) A company having reported total assets of $50,000,000 immediately expensed the purchase of 20 pencil sharpeners that have an estimated useful life of three years.
• C) A $75,000 illegal bribe by an executive of the company to a foreign official was not separately disclosed in the annual report.
• D) A $2,000 expenditure to improve a building that originally cost $10,000,000 was immediately expensed.

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Definitions:

Date Line

Indicates the moment when the date changes on Earth, generally located in the Pacific Ocean.

Business Letter

A formal document used for communication between companies, or between a company and its clients, suppliers, or other external entities.

Drawing Object

A graphical element, such as a shape or picture, that can be added to a document or presentation.

Graphic

A visual representation of data or artistic elements, including drawings, diagrams, photos, or any visual artwork.