The Materiality Constraint

question 12

Multiple Choice

The materiality constraint:

• A) States that an amount can be ignored if its effect on financial statements is unimportant to 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:

Bone And Cartilage

Connective tissues in animals; bones provide structural support and protection, while cartilage reduces friction and acts as a cushion between joints.

Ectoderm

The outermost of the three primary layers in an embryo, from which the skin, nervous system, and sense organs develop.

Germ Layer

One of the three primary layers of cells (ectoderm, mesoderm, and endoderm) in the very early embryo, from which all tissues and organs develop.

Digestive Tube

The tubular passage functioning in the digestion and absorption of food and the elimination of food residues, stretching from the mouth to the anus.