A Decision by an Accountant to Disregard Errors Involving Less

question 24

Multiple Choice

A decision by an accountant to disregard errors involving less than 1% of profits is an application of the concept of:

• A) relevance
• B) consistency
• C) disclosure
• D) materiality.

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Definitions:

Accounting Guidelines

Established principles and standards that govern financial reporting and bookkeeping practices.

Cost Method

A method of accounting where the investment is recorded at its acquisition cost, without subsequent change to market value.

Equity Method

An accounting technique used for recording investments in associate companies where the investment is initially recorded at cost and adjusted thereafter for the post-acquisition change in the investor's share of net assets of the investee.

Stock Investments-Long

Investments in stock securities intended to be held for a long-term period for capital appreciation, dividend income, or both.