Which of the following is an example of an item considered qualitatively material?
A) a change in an accounting method
B) related party transactions
C) being in danger of breaching a debt covenant
D) all of the above

Question

Quizplus · Accepted Answer

All the options listed are examples of qualitatively material items. Qualitative materiality refers to the importance of information that might influence the decision-making process of users of financial statements, even if the numerical impact is not significant. A change in accounting method, related party transactions, and being in danger of breaching a debt covenant are all significant for understanding a company's financial health and future prospects, hence they are considered qualitatively material.

Which of the Following Is an Example of an Item