An Item Is Considered Material If

question 25

Multiple Choice

An item is considered material if:

• A)it facilitates comparison with the financial statements of another company in the same industry.
• B)its inclusion in the financial statements would cause a statement user to change a decision.
• C)its dollar value is greater than 10% of net income.
• D)it is accounted for using a treatment that is not normally allowed by generally accepted accounting principles.

---

Definitions:

Alpha

In statistics, often refers to the significance level used in hypothesis testing, typically set at 0.05 or 0.01, representing the probability of incorrectly rejecting the null hypothesis.

Alpha

In statistics, the threshold of probability at which the null hypothesis is rejected, often set at 0.05 or 5%.

Type I Error

The error that occurs in hypothesis testing when a true null hypothesis is incorrectly rejected, falsely indicating a significant effect or difference.

Alpha

A threshold value used in hypothesis testing that defines the maximum probability of committing a Type I error.