Question

Explain the convention of materiality.

Answer 1

Answer:

CONVENTION OF MATERIALITY

Convention of materiality states that items of small significance need not to be given strict theoretically correct treatment. There are many events in business which are insignificant in nature. Moreover, it is one of the most important accounting convention.

Explanation:

Convention of Materiality. Convention of materialitystates that items of small significance need not to be given strict theoretically correct treatment. ... Thisconvention unnecessarily burden the accountants in case they are not able to distinguish between material and immaterial events.