Which of the Following Is a Difference Between Conservatism Principle

question 42

Multiple Choice

Which of the following is a difference between conservatism principle and materiality principle?

• A) Conservatism requires that financial reporting should neither disproportionately overstate nor understate a situation, whereas materiality holds that strict adherence to accounting principles is not required for items of little significance.
• B) Conservatism is listed as a constraint in the conceptual framework determined by the American financial community, whereas materiality is no longer listed as a constraint in the conceptual framework.
• C) Conservatism holds that strict adherence to accounting principles is not required for items of little significance, whereas materiality requires that financial reporting should neither disproportionately overstate nor understate a situation.
• D) Conservatism requires that revenues be measured within the specific reporting period, whereas materiality requires that costs be deducted from the reported revenues to determine the period's net income.

---

Definitions:

Success-Stimulus

The motivation or drive that individuals or organizations experience following successful outcomes, encouraging further efforts or achievements.

Exchange Network

A social structure formed around the dynamics of exchanging goods, services, or information among individuals or organizations.

Valued Resources

Assets, commodities, or services that are highly regarded or deemed beneficial by individuals or societies.

Emerson

Ralph Waldo Emerson was a leading figure in the transcendentalist movement of the mid-19th century, known for his work as an American essayist, lecturer, philosopher, and poet.