The Materiality Principle

question 151

Multiple Choice

The materiality principle:

• A)States that an amount can be ignored if its effect on financial statements is unimportant to the user's business decisions
• B)Requires use of the allowance method for bad debts
• C)Requires use of the direct write-off method
• D)States that bad debts not be written off
• E)Requires that expenses be reported in the same period as the sales they helped produce

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Definitions:

Quaker State

A brand known primarily for its line of motor oils and automobile-related products.

Philanthropic Marketing

Marketing strategies that involve charitable activities or donations as a means to promote a company’s brand or products while contributing to social causes.

Corporate Altruism

The practice of businesses voluntarily engaging in philanthropic activities and making decisions that benefit society as a whole, beyond what is required for profit maximization.

Cause Marketing

A type of corporate social responsibility, in which a company's promotional campaign has the dual purpose of increasing profitability while bettering society.