Explain the materiality concept of accounting.
Asked by Topperlearning User | 9th Jun, 2016, 12:29: PM
Materiality concept ensures that all the relatively relevant information is disclosed in the financial statements. Immaterial and irrelevant information is not recorded in the books of account. The materiality of the fact depends on the nature and the amount involved in the determination of income.
For example, stock of pencils, erasers and scales are not reflected as an asset. The amount spent on creation of additional working space of an office premise is material because it will increase the future earning capacity of the enterprise.
Answered by | 9th Jun, 2016, 02:29: PM
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