Lewis Corporation has a few large accounts receivable that total one million dollars, whereas Clark Corporation has many small accounts receivable that total one million dollars. Misstatement in any one account is more significant for Lewis corporation because of the concept of

The correct answer is letter "A": materiality.

Explanation:

Materiality is one of the Generally Accepted Accounting Principles (GAAP) that states that other accounting principles can be dismissed only in the case they do not reflect any impact on the company's Financial Statements. Unfortunately, the principle does not state what should or should not be considered important for the Financial Statements. Then, all the responsibility relies on the accountant to judge whether if the information to be recorded is material or immaterial.

Thus, the impact of not recording correctly each of the few account receivables for Lewis Corporation can result in a misleading Financial Statement. On the other hand, if one of the many account receivables is no properly recorded for Clark Corporation, the Financial Statements of that firm are unlikely to be badly impacted.

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