An item is considered material if
A) it doesn't cost a lot of money.
B) it is of a tangible good.
C) its size is likely to influence the decision of an investor or creditor.
D) the cost of reporting the item is greater than its benefits.

Question

Quizplus · Accepted Answer

Materiality refers to the significance of an item or information and its potential impact on the decisions of investors or creditors. Therefore, option C is the most appropriate choice as it directly relates to the size or significance of an item in influencing the decision of investors or creditors. Option A is incorrect as cost has no bearing on materiality. Option B is incorrect as materiality can also refer to intangible items such as intellectual property. Option D is incorrect as materiality does not depend on the cost or benefits of reporting an item.

An Item Is Considered Material If