Information is material if its omission,misstatement or non-disclosure has the potential,individually or collectively to:
A)affect the discharge of accountability by the governing body of the entity.
B)be greater than 1% of the total assets of the entity.
C)influence management to make decisions that will affect users of the financial report.
D)present the financial report in a 'true and fair' manner.

Question

Quizplus · Accepted Answer

Materiality is related to the significance of information and the impact it has on the decisions and actions of the users of financial statements. If the omission, misstatement, or non-disclosure of information has the potential to affect the accountability of the governing body, it is considered material. Option B is incorrect because the materiality threshold is not based on a fixed percentage of the total assets. Option C is incorrect as it refers to the influence on management rather than the impact on financial statements. Option D is incorrect because materiality is not solely related to presenting the financial report in a 'true and fair' manner - it is a broader concept that encompasses the significance of information.

Information Is Material If Its Omission,misstatement or Non-Disclosure Has the Potential,individually