The Materiality Concept States That a Company Must ________

question 55

Multiple Choice

The materiality concept states that a company must ________.

• A) report only such information that enhances the financial position of the company
• B) perform strictly proper accounting only for significant items
• C) report enough information for outsiders to make knowledgeable decisions about the company
• D) use the same accounting methods and procedures from period to period

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Definitions:

Nondiversifiable Risk

A type of risk that cannot be eliminated through diversification and affects all investments across the market.

Weighted Average

A mean where each value in the data set is multiplied by an assigned weight before the final calculation is performed.

Expected Return

Expected return is the anticipated amount of profit or loss an investment is likely to generate over a specific period.

Company Cost

Expenses incurred by a business in the process of earning revenues, often categorized into fixed and variable costs.