The cost of a small calculator is accounted as an expense and not shown as an asset in a financial statement of a business entity due to __________________.

Convention of materiality

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Matching concept

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Periodicity concept

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Convention of Conservatism

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Solution

The correct option is A Convention of materiality
Materiality states that only only those facts should be disclosed in the financial statement which have an impacts on the decisions making of the users of the financial statement. Here, cost of small calculator would not have an impact on the desicion making of the users of the financial statements. Therefore, they are treated as an expense.

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Similar questions

Which concept is the reason behind accounting the cost of a small calculator as an expense and not as an asset in financial statements of a business entity?

___ represents revenue, expenses and financial result of a business entity.

Q. _______ is a financial statement that shows the financial status of a business entity at a particular point of time.

Q. Outstanding expenses are considered as a/an for the business entity.

Which of the following are true or false?

(a) The historical cost does not reflect true value of the asset
(b) Accounting is a historical record of the transactions of a business entity.

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