The test to determine whether information which is otherwise relevant and faithfully represented, can be omitted, misstated or not disclosed separately without adversely affecting economic decision-making, is known as:
A) materiality.
B) comparability.
C) understandability.
D) consistency.

Question

Quizplus · Accepted Answer

This test is known as the materiality test, as materiality refers to the significance or importance of information to users of financial statements in making economic decisions. If the information is not material, it may be omitted or not disclosed separately without adversely affecting economic decision-making. The other options (comparability, understandability, and consistency) do not specifically relate to this test.

The Test to Determine Whether Information Which Is Otherwise Relevant