Question

If you have a transaction that is not significant (dollar-wise) to the company and you choose not to investigate the root issue of the transaction, that is which principle?

a. Materiality Principle
b. Consistency Principle
c. Conservatism Principle
d. Going Concern Principle

Answer 1

The correct answer is a.)Materiality Principle.

Step-by-step explanation:

The correct answer is a. Materiality Principle. The Materiality Principle states that a transaction or item can be considered immaterial if its omission or misstatement would not influence the decision-making process of users of financial statements. In the given scenario, if a transaction is not significant dollar-wise and choosing not to investigate the root issue would not impact the decision-making process, it can be considered immaterial as per the Materiality Principle.