Accounting for IGCSE & O level - Advanced Principles (Section 8 - No. 23)
Under the Materiality Principle, what criteria would be used to decide the significance of a small expense?
Whether the expense is material in relation to the company's total revenue.
Whether the expense will affect the profit or value of the business.
Whether the expense will exceed the profit reported
Whether the expense is easily recognizable by the business
Paliwanag
The principle of materiality states whether a small expense will affect the profit or value of the business.