Final answer:
The question involves a material misstatement in a company's financial statement due to non-disclosure of information required by GAAP, impacting a single line item on the balance sheet. Materiality is based on whether the information could influence financial decisions.
Step-by-step explanation:
The question refers to a situation where a company's financial statement does not disclose information required by generally accepted accounting principles (GAAP), and this lack of disclosure has led to a material misstatement. When a financial statement fails to present information as prescribed by GAAP, it is essential to assess the impact of this misstatement on users of the financial statements. For it to be considered material, the omission or misrepresentation must be significant enough to influence the economic decisions of users taken on the basis of the financial statements. Even if the misstatement affects only one line item on the balance sheet, it can still have material implications depending on the importance of that line item in the context of the entity's financial situation.