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Explain the following accounting concepts. i) Consistency ii) Materiality

Explain the following accounting concepts.
i) Consistency
ii) Materiality

Answers

Kavungya
. Meaning of the following accounting concepts;-
i. The consistency concept:
The consistency concept states that in preparing accounts consistency should be observed in two
respects.
a) Similar items within a single set of accounts should be given similar accounting treatment.
b) The same treatment should be applied from one period to another in accounting for similar
items. This enables valid comparisons to be made from one period to the next.
ii. The materiality concept:
It states that an item is considered material if it’s omission or misstatement will affect the decision
making process of the users. Materiality depends on the nature and size of the item. Only items
material in amount or in their nature will affect the true and fair view given by a set of accounts.
An error that is too trivial to affect anyone’s understanding of the accounts is referred to as
immaterial. In preparing accounts it is important to assess what is material and what is not, so
that time and money are not wasted in the pursuit of excessive detail.

Kavungya answered the question on May 15, 2019 at 12:34

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