A Company Decides to Ignore a Very Small Error in Their

question 109

Multiple Choice

A company decides to ignore a very small error in their inventory balance. This is an example of which of the following principles?

• A)Comparability principle
• B)Materiality concept
• C)Accounting conservatism
• D)Relevance principle

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Definitions:

Interest-Bearing Note

A debt security that pays interest to the holder at regular intervals until maturity, at which point the principal is repaid.

Proceeds

The total amount of money received from a transaction before any deductions are made.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time, typically reported on the income statement.

Notes Payable

Notes payable refers to the written promises to pay a certain amount of money, usually including interest, by a certain date, and are recognized as liabilities on a company's balance sheet.