The Materiality Constraint Refers To

question 94

Multiple Choice

The materiality constraint refers to:

• A)the significance of an item of financial data in relation to other financial data.
• B)whether the increased cost of complying with an accounting principle is justified by the benefit that would result.
• C)existing accounting practices that have evolved based on the amount of debt that would be incurred by the business.
• D)the idea that "when in doubt, take the conservative action."

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Definitions:

Customer Service Department

A division of a company responsible for handling interactions and inquiries from customers.

Capacity Analysis

An assessment process to determine the maximum level of output or production that a facility can sustain with the existing resources.

Time-Driven Activity-Based Costing

A refinement of activity-based costing that uses time as the main cost driver to allocate costs to products or services.

Order Fulfillment Department

The division within a company responsible for processing and delivering orders to customers.