The concept of 'Materiality' implies that: MCQ with Answer and Explanation

The concept of 'Materiality' implies that:
A. Only material items need to be disclosed as per accounting standards
B. All items must be disclosed irrespective of amount
C. Only large companies follow materiality
D. All transactions are material
Answer: Option A
Solution (By JKSSB Mock Tests)
Materiality means that items of significant value or nature should be disclosed; trivial items may be ignored.

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Practice More Accountancy and Book Keeping Questions

Question #1
Capital loss can be carried forward for:
A. 8 years
B. 16 years
C. 4 years
D. Indefinitely

Correct Answer: Option A


Explanation:
Capital losses (short-term and long-term) can be carried forward for 8 years.

Question #2
S1: Depreciation is the gradual decrease in the market value of an asset. S2: Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. Which statement(s) is/are correct?
A. Neither S1 nor S2
B. S2 only
C. Both S1 and S2
D. S1 only

Correct Answer: Option B


Explanation:
Deprecation is not a valuation process but an allocation process of historical cost over the useful life. It does not measure the decrease in market value. S1 is incorrect, S2 is correct.

Question #3
Under Ind AS 102, if a share-based payment transaction is settled in cash (e.g., Stock Appreciation Rights), how is it measured?
A. At the fair value of the liability at each reporting date and at the date of settlement
B. At the fair value of the equity instruments at the grant date
C. At the fair value of the liability at the grant date, not subsequently remeasured
D. At the intrinsic value of the equity instruments at the vesting date

Correct Answer: Option A


Explanation:
Ind AS 102 requires cash-settled share-based payments to be measured at the fair value of the liability, which must be remeasured at the end of each reporting period and at the date of settlement until it is paid.