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:

Interest Rates

The cost of borrowing money or the return on savings, typically expressed as a percentage.

Lottery

A lottery is a form of gambling that involves drawing numbers at random for a prize, often administered by state or federal governments.

Winnings

The amount of money or prizes won in a game or competition.

Worth Today

The present value of an amount of money in relation to its value in the future, considering factors like inflation and interest rates.