Which of the following statements relating to materiality is correct?

Question

Quizplus · Accepted Answer

Materiality depends on both size and importance/context. While size is one factor, the importance of the item in the overall financial picture must also be considered. The disclosure provisions of accounting standards do not need to be applied if the resulting information is immaterial, as it would not affect the overall financial picture. Extensive guidance is given in accounting standards on the concept of materiality, but the application of materiality must be made on a case-by-case basis. Therefore, option B is the correct statement. Option D is incorrect because, as previously noted, the disclosure provisions of accounting standards do not need to be applied if the resulting information is deemed immaterial.

Which of the Following Statements Relating to Materiality Is Correct