An accountant charged the Repairs Expense account for a tool that cost $12. The tool had an estimated useful life of 5 years; however, the accountant chose not to depreciate it. The modifying constraint that the accountant followed was
A)industry practice.
B)materiality.
C)conservatism.
D)objectivity.

Question

Quizplus · Accepted Answer

The accountant followed the modifying constraint of materiality, where small and insignificant values can be disregarded for the purpose of financial reporting. The accountant chose not to depreciate the tool as its value of $12 was not considered material enough to affect the overall financial picture of the entity.

An Accountant Charged the Repairs Expense Account for a Tool