chinnodog132 chinnodog132

25-02-2020
Business

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The concept of materiality_____________.

a. Affects only items reported in the income statement.
b. Treats as material only those items that are greater than 2% or 3% of net income.
c. Results in financial statements that are less useful to decision makers because many details have been omitted.
d. Justifies ignoring the matching principle or the realization principle in certain circumstances.

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BenitoMarin BenitoMarin

25-02-2020

Answer:

The correct answer is letter "D": Justifies ignoring the matching principle or the realization principle in certain circumstances.

Explanation:

According to the General Accepted Accounting Principles (GAAP), the materiality principle states that some accounting transactions could be ignored as long as they do not affect the Financial Statements. The issue relies on the accountant deciding which transactions to ignore since there is not a set guide established by the GAAP stating what could or could not be ignored.

Thus, the matching or realization principle could be ignored as long as the transactions involved do not affect the Financial Statements.

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