Asked by Chelianne Leata Miller on Jul 08, 2024
Verified
The materiality constraint:
A) Prescribes that accounting information is based on actual cost.
B) Provides guidance on when a company must recognize revenue.
C) Prescribes that only information that would influence the decisions of a reasonable person need be disclosed.
D) Prescribes that a company record the expenses it incurred to generate the revenue reported.
E) Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.
Materiality Constraint
An accounting principle that allows for the exclusion of insignificant financial information from reports because it would not impact decision-making.
Accounting Information
Data related to financial transactions and status of a business, used for analysis, decision making, and financial reporting.
- Delineate the effects of critical accounting norms such as the measurement (cost) principle, the full disclosure principle, and the materiality constraint.
Verified Answer
GB
George BoldingJul 14, 2024
Final Answer :
C
Explanation :
The materiality constraint prescribes that only information that would influence the decisions of a reasonable person need be disclosed.
Learning Objectives
- Delineate the effects of critical accounting norms such as the measurement (cost) principle, the full disclosure principle, and the materiality constraint.