Under IFRS, information is material if
Answer and explanation
Correct answer: C. omitting, misstating or obscuring it could reasonably be expected to influence decisions made by primary users
- Step 1: Materiality is defined in terms of the effect on user decisions.
- Step 2: Size and nature both matter, and there is no fixed percentage.
Answer
omitting, misstating or obscuring it could reasonably be expected to influence decisions made by primary users.
Why not the others: No single percentage applies in every case; nature as well as size is considered. Whether cash is involved has no bearing on materiality. Board approval does not determine materiality.
Practise more Accounting concepts, ethics and sustainability.
Free questions with an explanation for every one, and full timed ICAEW ACA Certificate Level mock tests.
More Accounting concepts, ethics and sustainability questions
- Under the IFRS Conceptual Framework, which pair are the two fundamental qualitative characteristics of useful financial information?
- A company's financial statements are prepared on the going concern basis. What does this assume?
- A sole trader pays £7,200 on 1 November for insurance covering the 12 months to 31 October the following year. The year end is 31 December.…
- Which of the following is the Conceptual Framework's definition of an asset?
- Goods are sold to a customer who has the right to require the seller to buy them back at the original price plus 10% after one year. Which c…
- Which statement about the 'true and fair view' override is correct for a company reporting under IFRS?