Question

An item is considered material if:

A. the cost of reporting the item is greater than its benefits.
B. it is of a tangible good.
C. it does not cost a lot of money.
D. its size is likely to influence the decision of an investor or creditor.

Answer 1

Answer:

The correct answer is D

Explanation:

Material is the term in business which is defined as the matter or information which is vital or important for the business and helpful for the business in making the decisions.

The items which are material, when they could collectively or individually influence or take the economic decisions of the users or business owners, taken from the financial statements.

So, from the above points, the item which is considered to be material if the size is likely to influence the creditor or the investor decisions.