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Question

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?


A

Conservatism

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B

Going concern

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C

Materiality

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D

None of the above

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Solution

The correct option is C

Materiality


Materiality is the concept which involves assigning significance to transactions in Accounting. This concept gives more significance to some things than others. This is to ensure Accountants do not spend a lot of time on recording and analyzing immaterial or insignificant data like Stationery (like the small calculator).


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