Commercial Applications
This principle is an exception to the principle of full disclosure.
- Materiality
- Consistency
- Conservatism
- Timeliness
Answer
Materiality
Reason — The Principle of Materiality is an exception to the Principle of Full Disclosure. It states that items having an insignificant or irrelevant effect on the user need not be disclosed. Only material facts that influence the decisions of informed users need to be disclosed.
Related Questions
The Accounting Period Concept requires that financial statements be prepared at regular intervals, even if the business is expected to close soon.
- True
- False
Assertion (A): The Going Concern Principle assumes that a company will continue its operations for the foreseeable future.
Reason (R): This principle allows fixed assets and liabilities to be reported at their historical cost rather than their liquidation value.
- A is true but R is false
- A is false but R is true
- Both A and R are true and R explains A.
- Both A and R are true but R does not explain A.
According to Business Entity Concept:
- Distinction should be made between fixed assets and current assets.
- Distinction should be made between business transactions and personal transactions.
- Distinction should be made between Capital expenditure and revenue expenditure.
- Accounting equation is always true.
Accounting means ……………
- Keeping an account of money received
- Keeping an account of money spent
- Keeping an account of money spent and loan received.
- Keeping an account of money received and money spent.