1. CPA-08471  Materiality and relevance are both defined by:  
        a. What influences or makes a difference to a decision maker.  
       b. Quantitative criteria set by the Financial Accounting Standards Board. 
        c. The consistency in the application of methods over time.  
        d. The perceived benefits to be denied that exceed the perceived costs associated with it.   
        AICPA Difficulty Rating: Medium  
        Question Title: AICPA Newly Released 2014  
        Lecture to be assigned to: Financial 1-Standard Setting, Income Statement, and Reporting Requirements  
       Topic to be assigned to: 1-Accounting Standards and conceptual frameworks Page reference (page # and outline point): F1-8; D. 1. a.   

       ANSWER:  
        Choice "a" is correct. The accountant's determination of materiality and relevance is based on professional judgment and is affected by the needs of thos e who will be using the financial statements to make decisions.   Choice "b" is incorrect. The Financial Accounting Standards Board does not establish quantitative criteria that define materiality and relevance.   
        Choice "c" is incorrect. Materiality and relevance are not defined by consistency in the application of methods over time. Consistency in the application of methods over time is a quality needed for the overall accounting process.   
        Choice "d" is incorrect. The perceived benefits to be denied that exceed the perceived costs associated with it does not define materiality and relevance. The perceived benefits achieved that exceed the costs associated with them better describes the cost constraint, which holds that the benefits of financial reporting must be greater than the costs of obtaining and presenting the information.