An ink-stand has been purchased by a firm for a nominal amount that is to last for 4 years. It should not be classified as a fixed asset under which of the following accounting principles:

Materiality Principle

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Timeliness Principle

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Consistency Principle

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Conservatism Principle

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Solution

The correct option is A Materiality Principle
Information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements but an ink stand of nominal amount is not material enough to be recorded as a Fixed Asset.

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An ink-stand has been purchased by a firm for a nominal amount that is to last for 4 years. It should not be classified as a fixed asset under which of the following accounting principles:

The correct option is A Materiality PrincipleInformation is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements but an ink stand of nominal amount is not material enough to be recorded as a Fixed Asset.

The correct option is A Materiality Principle
Information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements but an ink stand of nominal amount is not material enough to be recorded as a Fixed Asset.