Materiality is an aspect of the fundamental characteristic of relevance and:
A) means exercising due care and caution.
B) means attention to detail.
C) is linked to the qualitative characteristic of faithful representation.
D) provides a cut-off point in determining whether information is relevant.

Question

Quizplus · Accepted Answer

Materiality provides a cut-off point in determining whether information is relevant. If information is not material, it may not be necessary to include it in the financial statements as it would not impact decision-making by users of the financial information. Materiality is also linked to the qualitative characteristic of faithful representation as information must be complete, neutral, and free from material error to faithfully represent the financial position and performance of a company. However, materiality does not necessarily mean exercising due care and caution or attention to detail, although these may be important factors in determining materiality.

Materiality Is an Aspect of the Fundamental Characteristic of Relevance