Information That Is Material Means That an Error in Recording

question 56

Multiple Choice

Information that is material means that an error in recording the dollar amount of a transaction would

• A)likely affect the judgment of someone relying on the financial statements.
• B)not affect the decisions of financial statement users.
• C)not impact a business decision of a creditor.
• D)result in the overstatement of assets or income.

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Definitions:

Net Operating Income

A financial metric that calculates a company's income after operating expenses are subtracted but before interest and taxes are deducted.

Raw Materials

Basic materials that are used in the production process to manufacture goods.

Finished Unit

A product that has completed all stages of production and is ready for sale to consumers.

Cash Disbursements

Payments made in cash by a business during a period of time.