A misstatement in the financial statements can be considered material if
A) it overshadows the financial statements as a whole.
B) knowledge of the misstatement would affect the decision of a reasonable user of the statements.
C) it affects more than one account on the statements.
D) it affects only one account on the statements.

Question

Quizplus · Accepted Answer

A misstatement in the financial statements is considered material if knowledge of the misstatement would affect the decision of a reasonable user of the statements. Materiality is not determined by the size or number of accounts affected, but rather by the potential impact on the decision-making process of users of the financial statements.

A Misstatement in the Financial Statements Can Be Considered Material