The decision by a motor repair company to expense small tools immediately on acquisition rather than depreciate them over their useful lives is an application of the concept of:
A) timeliness.
B) materiality.
C) disclosure.
D) understandability.

Question

Quizplus · Accepted Answer

The decision to expense small tools immediately is based on the materiality concept, which states that accounting for an item should be based on its relative importance or size. Since small tools have a low cost and short useful life, it would not make sense to depreciate them over their useful life. Therefore, expensing them immediately is more material and practical.

The Decision by a Motor Repair Company to Expense Small