Stationary which will be used over a long period of time is usually recorded as an expense instead of an asset. This concept is called?

Assessment: JAMB UTME - Principles of Accounts - 2006 Subject: Financial Accounting

Question 1 Report

Stationary which will be used over a long period of time is usually recorded as an expense instead of an asset.

This concept is called?

entity

materiality

realization

accrual

Answer Details

The concept referred to in the question is materiality. Materiality is an accounting principle that states that an item or transaction should be recorded and reported in the financial statements if it is material or significant enough to affect the financial statements' users' decision-making process. In the case of stationary that will be used over a long period of time, it is not material enough to be recorded as an asset because it will not have a significant impact on the financial statements. Therefore, it is recorded as an expense when it is used.

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Stationary which will be used over a long period of time is usually recorded as an expense instead of an asset. This concept is called?

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