An inventory balance is immaterial when
A)knowing the correct balance would not change the decision of an outside user of the financial statements
B)the balance includes obsolete inventory
C)inventory is a long term asset
D)the cash balance exceeds the inventory balance

Question

Quizplus · Accepted Answer

An inventory balance is considered immaterial when knowing the correct balance would not change the decision of an outside user of the financial statements. This means that the inventory balance is not significant enough to impact decisions made by users such as investors or creditors. The other options are not relevant criteria for determining materiality of an inventory balance.

An Inventory Balance Is Immaterial When