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:

U.S. Economy

The economic system of the United States, characterized by a mixed economy with both private sector freedom and governmental regulation.

Incorporated

A legal status indicating that a company has been officially formed into a corporation, providing its owners limited liability protections.

Purchasing Agents

Individuals within a company responsible for acquiring goods, services, or works from external sources, usually for business purposes.