Materiality:
A) Is a standard for determining whether a financial event or issue must be reported.
B) Is no longer part of GAAP.
C) Is the reason EBITDA is now used.
D) Is a physical technique for managing earnings.

Question

Quizplus · Accepted Answer

Materiality is a standard for determining whether a financial event or issue must be reported. It is still a key concept in GAAP (Generally Accepted Accounting Principles) and is used to determine what information needs to be disclosed in financial statements. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is not directly related to materiality, although it may be used as a financial metric to evaluate a company's performance. Managing earnings through physical techniques is unethical and considered accounting fraud.