Question

Information is considered material to the financial statements if I. It falls within industry-specific quantitative guidelines published by the Financial Accounting Standards Board. II. Its omission could make a difference in the decisions made by a user relying on the financial statements. III. Its misstatement could make a difference in the decisions made by a user relying on the financial statement.

Answer 1

Answer:

The correct answer are I and II.

Explanation:

The conceptual framework of IFRS defines that: "The information is material or of relative importance if its omission or inappropriate expression can influence decisions that users make based on the financial information of a specific reporting entity."

Relative importance (materiality) is defined in ISA 320 using the definition used by the IASB in the conceptual framework, the relative importance needs to consider both the amount (amount) and the nature (quality) of the representations on an economic fact, in the same way it is It is necessary to consider the possibility of misrepresentations of relatively small amounts that could have an important effect on financial information.