Materiality Concept Accounting Example

Here we discuss about Materiality Concept Accounting with example. We already discussed about the Accounting Concepts topic.

According to this concept, the information is material if its omission or misstatement could influence the economic decisions of users of financial statements. For Example, if the information shows good signs related to investments of the business as shown through current assets under the head of Assets of Balance Sheet, then investors are more interested in investing in the company businesses. This information is material as on the basis of this information investors can take decision whether to invest in the company businesses or not.

All items which can influence the economic decision of the users of financial statements should be disclosed in the Notes to the Accounts’ section which is the Last Step of Steps in the Accounting Cycle.