Multiple choice

The cost of a small calculator is accounted as an expense and not shown as an asset in a financial statement of a business entity due to

  1. materiality concept

  2. matching concept

  3. periodicity concept

  4. conservatism concept

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The materiality concept states that items with insignificant value can be treated as expenses rather than capitalized as assets, for practicality and cost-benefit reasons. A small calculator has immaterial value relative to the business's overall financials, so it's expensed instead of being depreciated as an asset over its useful life.