Thursday, October 23, 2014

What is Materiality Constraint?

Materiality constraint is the constraint of determining whether an item is large enough to likely influence the decision of an investor or creditor. It is immaterial if it is too small to impact a decision maker. If the item does not make a difference, the company does not have to follow GAAP in reporting it.
Materiality Constraint means making a fraction to round figure. It means after a counting you got like 1500.85 so here you can write 1500 or 1501 any of these. That is you are going to shape your counting in round figure.