A Misstatement in the Financial Statements Can Be Considered Material

question 68

Multiple Choice

A misstatement in the financial statements can be considered material if

• A)it overshadows the financial statements as a whole.
• B)knowledge of the misstatement would affect the decision of a reasonable user of the financial statements.
• C)it affects more than one account on the financial statements.
• D)it affects only one account on the financial statements.

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Definitions:

Services Performed

Tasks or work completed, particularly in the context of professional or commercial services.

Depreciation Expense

An accounting method used to allocate the cost of a tangible asset over its useful life, representing how much of an asset's value has been used up over a period.

Accumulated Depreciation

The cumulative total of the depreciation expense allocated for a physical asset from the time it was first utilized.

Equipment

Equipment consists of the tools, machinery, and other tangible assets used by a company in its operations.