Some companies choose to avoid assigning incidental costs of acquiring merchandise to inventory by recording them as cost of goods sold when incurred. The principle that supports this is called:
A) The cost principle.
B) The lower of cost or market principle.
C) The conservation constraint principle.
D) The expense recognition principle.
E) The materiality constraint.

Question

Quizplus · Accepted Answer

The materiality constraint allows companies to expense small, incidental costs immediately if they are not significant enough to affect financial statements, rather than assigning them to inventory.

Some Companies Choose to Avoid Assigning Incidental Costs of Acquiring