The SEC Advisory Committee on Improvements in Financial Reporting Identified

question 59

Multiple Choice

The SEC Advisory Committee on Improvements in Financial Reporting identified each of the following as a view of equity and credit analysts about investor's views on materiality and financial statement restatements except for:

• A) Bright line rules are useful in making materiality judgments
• B) Bright line rules are not really useful in making materiality judgments
• C) The disclosure provided on restatements is not adequate
• D) One of the major costs of restatements is the amount of time between the restatement announcement and the final resolution of the restatement

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Definitions:

Disbursements

The act of paying out or distributing money, often by a business for various expenses.

Equipment Account

An account that tracks the cost of equipment a company owns, minus any accumulated depreciation.

Liability Account

An account that records obligations or amounts owed to others that will require a future outflow of resources.

Liabilities

Financial obligations or debts owed by a business to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.