Which One of the Following Statements Is NOT Correct

question 44

Multiple Choice

Which one of the following statements is NOT correct?

• A) Normally, the most important base used as the criterion for deciding materiality is total assets.
• B) Qualitative factors as well as quantitative factors affect materiality.
• C) Materiality is a relative rather than an absolute concept.
• D) Given equal dollar amounts, fraud is usually considered more important than errors.

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Definitions:

Effective-Interest Amortization

A method of calculating the amortized cost of a bond or loan based on the periodic interest rate applied to the carrying amount, resulting in an equal interest expense over the period.

Bonds

Fixed-income investments representing loans to borrowers such as corporations or governments, paid back with interest over time.

Interest Accrual

The process of recognizing interest expense or interest income that has been earned but not yet paid or received.

Earnings Per Share

A company's net profit divided by the number of its common shares outstanding, indicating the profitability on a per-share basis.