68 Quiz Help MC Qu 205 The materiality constraint The materi

68% Quiz Help MC Qu. 205 The materiality constraint: The materiality constraint Multiple Choice Prescribes that only information thet would influence the decisions of a reasonable person need be disclosed Provides guidance on when a company must recognize revenue Prescribes that a c ompa y record the eenses·reined to thar accounting information is ased on actua 2 4

Solution

Materiality constraints prescribes that only information that would influence the decisions of a responsible person need be disclosed.

The materiality constraints are the result used to determine whether the bussiness transactions are required and important to thefinancial results of the bussiness. The materiality constraints are the key consideration in the process of closing the books, and helps accountants by allowing them to use the simplest transaction recordation alternatives for small items. The term materiality refers to an accounting constraint that is used to know the relative importance or value of an item to the companys financial statements.if the item is not sufficient enough to influence the decision making process of an individual examining of comanys statements then that item is not considered as material.