materiality concept
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The concept of materiality in accounting is very subjective, relative to size and importance. Financial information might be of material importance to one company but stand immaterial to another company. This aspect of materiality concept is more noticeable when the comparison between companies which vary in terms of their size i.e. a large company vis-à-vis a small company. A similar cost may be considered to be the large and material expense for a small company, but the same may be small and immaterial for a large company because of their large size and revenue.
As such, it can be said that the main objective of the materiality concept in accounting is to assess whether the financial information under consideration makes any significant impact on the opinion of the financial statement users. If the information is not material, then the company does not need to worry about including it in their financial statements. The financial statement users mentioned here can be auditors, shareholders, investors etc.
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