A stapling machine,costing $25 with a useful life of 5 years,is treated as a stationery expense rather than as an asset.To what financial statement assumption does this relate?
A) materiality
B) monetary
C) accounting period
D) accounting entity.

Question

Quizplus · Accepted Answer

The decision to expense the stapling machine rather than capitalize it as an asset is based on the concept of materiality, which states that a small or insignificant expense can be treated as an expense rather than an asset. In this case, the cost of the stapling machine is relatively low in comparison to the overall financial position of the company and its useful life is also short, making it immaterial to the financial statements.

A Stapling Machine,costing $25 with a Useful Life of 5