Which of the Following Is Not a Concern as to Whether

question 52

Multiple Choice

Which of the following is not a concern as to whether a misstatement is qualitatively material? 

• A)The misstatement hides a failure to meet analysts' expectations.
• B)The misstatement is less than 5% of pretax income.
• C)The misstatement increases management's compensation.
• D)The misstatement changes a small amount of profit to a small reported loss.

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Definitions:

Entity Principle

An accounting concept that treats a business as separate from its owners or other businesses for financial reporting.

Executive Officers

High-ranking executives who are responsible for managing the operations and resources of a company, making major corporate decisions, and ensuring the company's operational success.

Stock Dividend

A payment made by a corporation to its shareholders in the form of additional shares rather than cash.

Market Price

The current price at which an asset or service can be bought or sold in a particular market.