PTG Enterprises purchases many small pieces of office furniture, such as trash cans, that cost less than $100 each. PTG accounts for these items as expenses when acquired rather than reporting them as property, plant, and equipment on its balance sheet. The company's accountant states that no accounting principle has been violated. Justification for PTG's policy of expensing these furniture items is based on cost vs. benefit considerations as well as qualitative characteristic of accounting information of:

Question

Quizplus · Accepted Answer

PTG's policy of expensing small office furniture items is based on materiality, which means that items that are not significant enough to affect financial statements can be expensed instead of being recorded as assets on the balance sheet. This is a cost-effective and efficient practice that does not violate any accounting principles.

PTG Enterprises Purchases Many Small Pieces of Office Furniture, Such