The drawback of studying absolute amounts reported in financial statements is the problem of differing materiality levels.
Answer the following statement true (T) or false (F)
True
Comparing only absolute amounts has drawbacks because materiality levels differ from company to company or even from year to year for a given company. The materiality of information refers to its relative importance. An item is considered material if knowledge of it would influence the decision of a reasonably informed user.
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