Our aunt recently received the annual report for a company in which she has invested. The report
Question:
Our aunt recently received the annual report for a company in which she has invested. The report notes that the statements have been prepared in accordance with "Generally Accepted Accounting Principles." She has also heard that certain terms have special meanings in accounting relative to everyday use. She would like you to explain the meaning of terms she has come across related to accounting.
How is "Materiality" defined in the conceptual framework?
A. The Conceptual Framework defines materiality as five percent.
B. Materiality is strictly a quantitative characteristic of accounting information
C. Materiality and relevance are both defined in terms of what influences or makes a difference to a decision maker
D. None of these are correct
Expert Answer:
C Materiality and relevance are both defined in terms of what influences or mak... View the full answer
