Which of the Following Statements About AASB 1031 Materiality Is/are $\quad$

question 29

Multiple Choice

Which of the following statements about AASB 1031 Materiality is/are correct?
I. $\quad$ Qualitative factors may be the primary reason that an item is classified as material.
II. $\quad$ Materiality means that accounting standards only have to be applied to an item if the amount of the item is greater than or equal to 10 per cent of the relevant base amount.
III. $\quad$ An accounting standard's provisions may have to be applied to an item even when that item is less than 1 per cent of the relevant base amount.
IV. $\quad$ Materiality applies to accounting measurement and policies but not to disclosure.

• A)III only
• B)I and II only
• C)I and III only
• D)I, III and IV only

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Definitions:

Readily Marketable

Items or securities that are readily marketable can be quickly sold in the market without significantly affecting their price.

Operating Cycle

The duration of time it takes for a company to purchase inventory, sell products, and receive cash from sales, representing the full cycle of a business's operations.

Short-Term Investments

Investments typically expected to be converted into cash within one year, such as stocks or bonds.

GAAP

GAAP stands for Generally Accepted Accounting Principles, which are a collection of commonly-followed accounting rules and standards used in the United States for financial reporting.