A common application of materiality is weighing the factual nature of cost figures versus the relevance of fair value.

Question

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Materiality is a concept used in accounting and auditing to assess the significance of an amount, transaction, or discrepancy to inform decisions and reporting. It does not involve weighing the factual nature of cost figures versus the relevance of fair value, but rather it helps determine what information is important enough to affect decisions of financial statement users.

A Common Application of Materiality Is Weighing the Factual Nature