The materiality constraint:
A)States that an amount can be ignored if its effect on financial statements is unimportant to the user's business decisions.
B)Requires use of the allowance method for bad debts.
C)Requires use of the direct write-off method.
D)States that bad debts not be written off.
E)Requires that expenses be reported in the same period as the sales they helped produce.

Question

Quizplus · Accepted Answer

The materiality constraint requires that an amount can be ignored if its effect on financial statements is unimportant to the user's business decisions. This means that only significant amounts need to be reported in the financial statements.

The Materiality Constraint