With Respect to the Concept of Materiality,which One of the Following

question 39

Multiple Choice

With respect to the concept of materiality,which one of the following statements is correct?

• A) Materiality depends only on the dollar amount of an item relative to other items in the financial statements.
• B) Materiality depends on the nature of a transaction rather than the dollar amount of the transaction.
• C) Materiality is determined by reference to AICPA guidelines.
• D) Materiality is a matter of professional judgment.

---

Definitions:

State Income Taxes

Taxes imposed on individuals or entities by individual states on the income earned within that state.

Tax-Deferred Savings

Investment accounts, like IRAs and 401(k)s, where contributions and earnings are tax-exempt until withdrawal, typically at retirement.

Flexible Spending Account

A special account you put money into that you use to pay for certain out-of-pocket health care costs, using pre-tax dollars, thus reducing taxable income.

Medical Insurance

A type of insurance coverage that pays for an insured individual's healthcare expenses.