Final answer:
Materiality in business refers to the significance of information that could influence a decision maker's judgment, which makes it a crucial concept in financial reporting. Whereas, the statement about Dillon's Rule is false because it actually restricts local governments' powers to those expressly granted by state law, not giving them freedom and flexibility. The correct option for the question is: A. True
Step-by-step explanation:
The concept of materiality pertains to accounting and business decisions. Materiality refers to the significance of an amount, transaction, or discrepancy that would affect the judgment of a reasonable person based on the context of its presentation. It determines the threshold or cut-off point after which financial information becomes relevant to the decision-making process of users of that information.
When information is material, it means that its omission or misstatement could influence the economic decisions of users made on the basis of the financial statements. The principle of materiality is a fundamental concept in accounting that ensures that all significant information in financial reporting is disclosed. The assessment of materiality requires professional judgment.
In contrast, the statement that Dillon's Rule gives local governments the freedom and flexibility to make decisions for themselves is false. Dillon's Rule is a legal principle that limits the powers of local government to those expressly granted by state law or implied by the state constitution. Instead of granting freedom and flexibility, it restricts local governments to only those powers which are explicitly given to them.