Explain Why It Is Necessary to Allocate the Preliminary Judgment

question 65

Essay

Explain why it is necessary to allocate the preliminary judgment about materiality to individual accounts (segments) in the financial statements. Also explain why allocating to balance sheet accounts is more common than allocating to income statement accounts.

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Definitions:

Organ Reserve Power

The capacity of an organ to function beyond its normal requirements, allowing the body to cope with excess stress or demand.

Decade

A decade, defined as a span of ten years.

Average Age

A statistical measure that sums the ages of all individuals in a group and divides by the number of individuals to define the central age for that population.

Marriage

A legally and socially sanctioned union between individuals that establishes rights and obligations between them.