Which of the following is allowed under generally accepted accounting principles?
A)A large company recorded the $20 cost of a tool as an expense, although the item is expected to be used for 3 years.
B)The Equipment account shows a balance of $55,000. This amount represents the original cost of $75,000 less the accumulated depreciation of $20,000.
C)An owner lists the full cost of his or her personal automobile, which is occasionally used for business purposes, on the company's balance sheet.
D)A company was offered $60,000 for land that it had purchased for $15,000. The company did not sell the land but increased the Land account to $60,000.

Question

Quizplus · Accepted Answer

Under generally accepted accounting principles (GAAP), the materiality principle allows small costs, like a $20 tool, to be expensed immediately rather than capitalized, especially if the amount is insignificant to the financial statements.

Which of the Following Is Allowed Under Generally Accepted Accounting