A Company Decides to Ignore a Very Small Error in Its

question 28

Multiple Choice

A company decides to ignore a very small error in its inventory balance.This is an example of which of the following principles?

• A)Relevance principle
• B)Comparability principle
• C)Materiality concept
• D)Accounting conservatism

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Definitions:

Toll Road

A public or private roadway for which a fee is assessed for passage, commonly used to fund road maintenance or construction projects.

Fine

A monetary penalty imposed by a government or legal authority as punishment for breaking a law or regulation.

Risk-Averse

A preference for guaranteed outcomes over gambles, even if the gamble might have a higher expected return due to the dislike of uncertainty.

Risk-Neutral

An attitude towards risk wherein the decision-maker is indifferent between different alternatives with the same expected return, disregarding the level of risk associated with each.