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Materiality Concept:
There are several events in business that are trivial or insignificant in nature. The cost of reporting and recording such events will not be justified through the usefulness of the information derived. The materiality concept holds such items of small importance require not be specified strict theoretically accurate treatment. For illustration, a paper stapler costing Rs. 30 may last for three years. Though, the effort included in allocating its cost over the three-year period is not worth the profit than can be derived from this operation. As the item clearly is immaterial when associated to overall operations, the cost incurred on this may be reacted as the expense of the period wherein it is acquired. Several of the stationery purchased for office utilize in any accounting period may continue unused at the end of such period. In accounting, the amount spent in the entire stationery would be reacted as an expense of the period wherein the stationery was purchased, notwithstanding the actuality that a tiny part of it still lies in stock. The value or cost of the stationery lying in stock would not be reacted as an asset and carried forward like a resource to the subsequently period. The accountant would regard the stock lying not used as immaterial. Thus, all amount spent on stationery would be considered as the expense of the period wherein such expense was incurred.
Where to sketch the line in between immaterial and material events is a matter of judgment and common sense. There are no rigid rules in this respect. Whether a specific item or occurrence is material or not, must be determined by considering its association to the other items and the surrounding conditions. This is desirable to establish and obey uniform policies governing such matters.
Finance: It is the part of economics that studies the management of money and other assets. In easier terms it can be explained as the commercial activity of providing funds and c
define accounting. Briefly explain its concepts
Why is the cash basis of accounting not used when preparing financial statements?
decrease in assat & decrease in capital
Earned service revenue and received cash As its first transaction in July Metro performed deliverance services for customers and received USD 4800 cash. This transaction improv
Q. Explain Vertical analysis? Vertical analysis demonstrates the percentage that each item in a financial statement is of some significant total such as total assets or sales.
Wings Inc., a software development firm, has stock outstanding as follows: 25,000 shares of cumulative 1%, preferred stock of $40 par, and 50,000 shares of $120 par common. Durin
“Ledger is said to be the principal book entry and the transactions can even be directly entered into the ledger account.” Elaborate and explain why journal is necessary.
how to analyze im a beginner
Human Resource Accounting: Way back in the year 1964 the first attempt to comprise figures on human capital in the balance sheet was made through Hermansson that later came to
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