Long Corporation has adopted the policy of charging to expense at the time of purchase all assets having a cost of less than $200, regardless of the life expectancy of the asset. This policy is most closely related to the
A) historical cost principle
B) period-of-time assumption
C) verifiability principle
D) materiality principle

Question

Quizplus · Accepted Answer

The materiality principle allows companies to disregard GAAP rules for items that are insignificant to the financial statements. Long Corporation's policy of expensing assets under $200, regardless of their life expectancy, is an application of this principle, as it simplifies accounting for small-value items that would not materially impact financial statements.

Long Corporation Has Adopted the Policy of Charging to Expense