Question

Purchase of pen is treated as expense. Name the accounting concept involved in this statement​

Answer 1

Answer:

Matching Concept

Explanation:

This concept states that the revenue and the expenses of a transaction should be included in the same accounting period.

If you Purchase of pen is treated as expense and it is recorded in books of accounts and at the same time you have to pay for that pen and there is a cash outflow and you get benifit of getting a pen.

Answer 2

Answer:

Materiality concept

Explanation:

According to the accounting principle of materiality, all detail that could potentially affect investors' ability to make informed decisions must be documented or disclosed in a company's financial statements prepared in accordance with GAAP.

In essence, materiality has to do with the importance of the data seen in a company's financial statements. Information that is "material" to the firm and cannot be removed includes transactions and business decisions that are substantial enough to require reporting to investors or other readers of the financial statements.

Depending on the size and scope of the company in question, different things will be seen to be material and immaterial. For instance, a small, family-run grocery store might have to record a modest charge for promotional coupons, whereas Whole Foods might not have to do so for a comparable offer. All of it is relative. Both financial and non-financial things can be classified as material.

Due to the potential influence both pieces of information could have on investors' perceptions of the company, a corporation may need to disclose current litigation to the same extent as it discloses its revenues.

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