Why is the materiality of a transaction

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The Concept of Materiality

1. Why is the materiality of a transaction or an event a matter of professional judgement?

2. What criteria should accountants consider in determining whether a transaction or ay event is material?

3. Does the concept of materiality mean that financial statements are not precise, down to the last dollar? Does this concept make financial statements less use full to most users?

Avis rent-a-car purchases a large number of cars each year for its rental fleet. The cost of any individual automobile is immaterial to Avis, which is a very large corporation. Would it be acceptable for Avis to charge the purchase of automobiles for its rental fleet directly to expense rather than to an asset account?

Reference no: EM13124955

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