Читать книгу Financial Accounting For Dummies - Maire Loughran - Страница 27

While preparing financial statements, accountants realize that time is money and there is a limit to the amount of cost that should be incurred for any reporting benefit. The agencies that set the standards for accounting practices (which I introduce in Chapter 4) always perform a cost/benefit analysis before finalizing any reporting requirements. Associated with this financial accounting constraint is the concept of materiality.

Materiality is the importance you place on an area of financial reporting based upon its overall significance. What is material for one business may not be material for another. You have to consider the size of the company, the size of the financial statement transaction, the particular circumstances in which the transaction occurred, and any other factors that can help you judge whether the issue is truly significant to the financial statement users.