The Concept of Materiality

question 46

Multiple Choice

The concept of materiality:

• A)Treats as material only those items that are greater than 2% or 3% of net income.
• B)Justifies ignoring the matching principle or the realization principle in certain circumstances.
• C)Affects only items reported in the income statement.
• D)Results in financial statements that are less useful to decision makers because many details have been omitted.

---

Definitions:

Cash Flow Amounts

The net amount of cash and cash-equivalents being transferred into and out of a business.