Hunsinger Enterprises purchases many small pieces of office furniture,such as trash cans,that cost less than $100 each.The company accounts for these items as expenses when acquired instead of reporting them as property,plant,and equipment on its balance sheet.The company's accountant states that no accounting principle has been violated.What accounting constraint is the justification for expensing these furniture items,aside from cost vs.benefit considerations?

Question

Quizplus · Accepted Answer

The accounting constraint that justifies expensing small items like trash cans is materiality. Materiality refers to the concept that items that are insignificant in amount can be treated as expenses instead of being recorded on the balance sheet. Since the cost of these small items is less than $100, they are considered immaterial and can be treated as expenses.

Hunsinger Enterprises Purchases Many Small Pieces of Office Furniture,such as Trash