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true or false, materiality principle recognizes the size of an item of error or misstatement that...

true or false, materiality principle recognizes the size of an item of error or misstatement that is capable of influencing the decision of the reader of a financial statement
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Answer #1

True

Explanation : Financial information might be material to one company but might be immaterial to another company.

It influences the decision making of users of Financial statements.

For eg : A large company has around a turnover of $1,00,000 and $500 worth inventory was lost in fire accident it is not immaterial for the company.

Similarly a company has a turnover of $10,000 and it has lost $500 of inventory in fire accident it is material to this company.

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