The concept of materiality:
A)Treats as material only those items that are greater than 2% or 3% of net income.
B)Justifies ignoring the matching principle or the realization principle in certain circumstances.
C)Affects only items reported in the income statement.
D)Results in financial statements that are less useful to decision makers because many details have been omitted.

Question

Quizplus · Accepted Answer

Materiality allows for the omission or simplification of accounting information that would not significantly influence the decision-making process of users of financial statements. This concept can justify deviations from certain accounting principles, like the matching or realization principles, when the impact of strictly following them is immaterial to the financial statements' overall presentation and users' decision-making.

The Concept of Materiality