Which of the Following Items Would Most Likely Be a Violation

question 40

Multiple Choice

Which of the following items would most likely be a violation of the materiality constraint?

• A) A company did not separately report an unusual gain of $100,000. Its income from operations was $20,000,000.
• B) A company having reported total assets of $50,000,000 immediately expensed the purchase of 20 pencil sharpeners that have an estimated useful life of three years.
• C) A $75,000 illegal bribe by an executive of the company to a foreign official was not separately disclosed in the annual report.
• D) A $2,000 expenditure to improve a building that originally cost $10,000,000 was immediately expensed.

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Definitions:

Tense

A grammatical category used to express time in verb forms, indicating past, present, or future action.

Pronoun Case

Refers to the form of a pronoun based on its function in a sentence, such as subjective (I, we), objective (me, us), and possessive (my, our).

Correct Case

The appropriate or accurate grammatical case (nominative, accusative, etc.) used in a language.

Capitalization

The use of uppercase letters at the beginning of sentences or proper nouns; also refers to the total value of a company's shares on the stock market.