Materiality should be factored in at all points of financial statement creation, because it can directly impact the overall outlook of the financial statement. Application of accounting standards: Accounting standards need to be catered in when it comes to application of accounting standards.Materiality Concept is used in accounting on a number of grounds, specifically the following instances: Materiality Concept in Accounting – Fundamental Uses If a company regards one particular transaction (or type of transaction) as material one year, they cannot randomly classify it as immaterial in the next year. It is important to consider the fact that materiality is supposed to stay consistent from year to year. Past History and consistency: Across years of operations, materiality threshold is unlikely to change in a company.Therefore, industry standards present a proper stencil in order to ensure that best possible results are obtained in order to gauge the respective thresholds. For other manufacturing concerns, capital costs might not be very significant. Examples include oil and gas companies, as well as telecommunication companies.
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