Which of the Following Statements Concerning Materiality Is True

question 101

Multiple Choice

Which of the following statements concerning materiality is true?

• A)Generally accepted accounting principles are violated if estimates are used in end-of-period adjustments.
• B)Each year the Financial Accounting Standards Board (FASB)publishes the dollar amount considered "material" for each industry.
• C)Immaterial items should be handled in the most expedient manner,even if resulting financial statements are not completely precise.
• D)Accountants should not waste time and money in recording transactions involving small dollar amounts.

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Definitions:

Post-Merger Cash Flows

The net amount of cash that a company generates or consumes after completing a merger or acquisition.

Synergies

Refers to the potential financial benefit achieved through the combining of companies, resources, or assets to create value greater than what those entities could produce independently.

Economies Of Scale

Cost advantages reaped by companies when production becomes efficient, through scaling up.

Junk Bonds

High-yield bonds with a lower credit rating than investment-grade, indicating higher risk of default.