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MATERIALITY CONCEPT

7 四月, 2016 - 15:40

The materiality concept proposes paying attention to important events and ignoring insignificant accounting items. The extra effort required to process insignificant items is not cost effective. The concept of materiality also suggests that small asset purchases or improvements should be initially written off as an expense. Definitive rules exist on whether an accounting element is significant or insignificant. Therefore decisions are based on both objective and subjective criteria.