— Kishore V, SME and ACW at Edumarz.
Materiality concept:
Financial statements should, according to this, reveal all important elements that may impact the judgments of financial statement users.
As a result, any item that is not important or relevant to the users does not need to be mentioned in the financial statements.
This principle is essentially an exception to the norm of full disclosure.
Materiality is a concept that is subjective in nature.
It depends on the amount of money involved in the transaction, the size of the company, the type of the data, the needs of the decision-maker, and so on.
Objectives concept:
All accounting transactions must be based on the aim, according to the objective notion.
Documents such as cash receipts, invoices, and other documents are included in the object.
It assures that transactions recorded in the books of accounts are genuine, accurate, and reliable.