What Guidelines Are Available in AASB 1031 'Materiality' to Assist

question 24

Multiple Choice

What guidelines are available in AASB 1031 'Materiality' to assist in determining the materiality of an item?

• A) If the amount is equal or greater than 10% of the appropriate base amount, the item is material.
• B) If the amount is equal or greater than 10% of the appropriate base amount, the item is immaterial.
• C) If the amount is equal or less than 5% of the appropriate base amount, the item is material
• D) If the amount is equal or greater than 10% of the appropriate base amount, the item is material; if the amount is equal or less than 5% of the appropriate base amount, the item is immaterial.

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Definitions:

Administrative Expenses

Expenses related to the general operation of a business, such as salaries of non-sales personnel, rent, utilities, and office supplies.

Accounts Receivable

Money owed to a company by its customers for products or services that have been delivered or used but not yet paid for.

Bankruptcy Reform Act

Refers to legislation enacted to reform the bankruptcy law, such as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which introduced significant changes to filing requirements and procedures.

Chapter 7

A section of bankruptcy law under which a debtor's assets are liquidated (sold off) to pay creditors.