Accounting Framework - Convention of Materiality

Materiality means relative significance. In other words whether a matter should be disclosed or not in the financial statements depend on its materiality. American Accounting Association (AAA) describes 'Materiality' as follows. An item should be regarded as material if there is a purpose to believe in which knowledge of it would influence the decision of informed investors. Within this regard, the accountant is vitally concerned along with the following two significant matters:

(a)  Materiality of information; and

(b)  Materiality of amounts

The materiality depends on the amount and the nature of the account. It should be remembered that this doctrine of materiality also refers to separate disclosure of data in the published financial statements.

 

Posted Date: 2/6/2013 12:37:23 AM | Location : United States

Ask an Expert

Related Discussions:- Accounting framework - convention of materiality, Assignment Help, Ask Question on Accounting framework - convention of materiality, Get Answer, Expert's Help, Accounting framework - convention of materiality Discussions

Write discussion on Accounting framework - convention of materiality
Your posts are moderated

Write your message here..

Related Questions

Over the counter (otc), OTC refers to financial securities whose sale and p... OTC refers to financial securities whose sale and purchase are not conducted over a stock exchange.

Working capital management, I need a report on Working Capital Management. ... I need a report on Working Capital Management. Can you please assist me for Working Capital Management report for about 2500 words?

Evaluate cost of irredeemable debt subsequent to tax, Q. Evaluate Cost of I... Q. Evaluate Cost of Irredeemable Debt subsequent to tax? Cost of Irredeemable Debt subsequent to tax: - When a company utilizes debt as a source of finance then it saves a cons

Company financial performance, In the telecom industry of the Australia, th... In the telecom industry of the Australia, these are some most important organizations such Vodafone Austrelia‎, TransACT Capital Communications, Optus, and Telstra. Vodafone A

Swing traders, Swing Traders Swing trading is more or less similar to d... Swing Traders Swing trading is more or less similar to day trading except that swing traders will normally have a longer holding period during a working day. Swing traders also

Estimate financing types and requirements, This case provides the opportuni... This case provides the opportunity to match financing alternatives with the needs of different companies. It allows the reader to demonstrate a familiarity with different types

Limitations of the cash flow yield measure, Bond's potential re... Bond's potential returns are calculated using measures like Yield to Maturity (YTM) and cash flow yield. Both these measures are not free from s

Short-term volatility position, (a) The position of an agency that sells a ... (a) The position of an agency that sells a callable coupon bond. We supposed that coupon bond has a maturity of 3 years and is callable only at the second year. (b) The market t

Operating cycle, applicability of an operating cycle in a vegetable growing... applicability of an operating cycle in a vegetable growing business

Define intermediation, Define intermediation The financial system makes... Define intermediation The financial system makes it probable for surplus and deficit economic units to come together, exchanging funds for securities, to their mutual advantage