The Concept of Materiality

question 72

Multiple Choice

The concept of materiality:

• A)Involves only tangible assets and not intangible assets.
• B)Relates only to the income statement and not the balance sheet.
• C)Is always an exact percentage of a financial account balance.
• D)Is measured as an item significant enough to influence the decisions of users of financial statements.

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Definitions:

Predetermined Overhead Rate

A calculation used in cost accounting to allocate overhead costs to products or job orders based on a set formula before the period begins.

Direct Labour-hours

The total number of labor hours spent directly on the production of goods or services.

Job-order Costing

A costing method used to track costs to individual jobs or batches, assigning direct costs and allocating indirect costs to each job.

Labour Time

The total hours worked by employees measurable for a specific period, often used for costing and productivity analysis.