Which of the Following Statement(s)is/are True with Respect to Materiality

question 22

Multiple Choice

Which of the following statement(s) is/are true with respect to materiality?

• A) Materiality refers to the notion that an item need not be recognised in the financial reports.
• B) Materiality is a primary qualitative characteristic.
• C) Materiality relates to financial information where its omission or misstatement could influence the economic decisions of users.
• D) Materiality relates to financial information where its omission or misstatement could influence the economic decisions that users make about a specific reporting entity.

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Definitions:

Beginning Units

Refers to the number of units or quantity of goods on hand at the start of an accounting period.

Operating Budget

A detailed projection of all expected income and expenses based on forecasted sales revenue during a specified period, usually a fiscal year.

Direct Labor Budget

A financial plan that estimates the cost of the direct labor required to meet production needs, including wages of workers who are directly involved in the manufacturing of goods.

Cash Budget

A forecast of cash inflows and outflows over a specific period, used to manage liquidity and ensure sufficient cash is available for operations.