1 and 2

1. (CPA, adapted) According to Statements of Financial Accounting Concepts, materiality is an ingredient of Relevance Faithful Representation A. No Yes B. No No C. Yes Yes Yes No D. 2. (CPA, adapted) Omega Co. must determine the December 31, year 2 year-end accruals for advertising and rent expenses. A $500 advertising bill was received January 7, year 3. It related to costs of $375 for advertisements in December year 2 issues and $125 for advertisements in January year 3 issues of the newspaper. A store lease, effective December 16, year 1, calls for fixed rent of $1,200 per month, payable 1 month from the effective date and monthly thereafter. In addition, rent equal to 5% of net sales over $300,000 per calendar year is payable on January 31 of the following year. Net sales for year 2 were $550,000. In its December 31, year 2 balance sheet, Omega should report accrued liabilities of 2 A. $12,875 B. $12,500 C. $13,475 D. $13,100