Question

What accounting constraint from the conceptual framework leads to incidental costs sometimes being ignored in computing the cost of inventory?

Answer 1

2) Principle of materiality" leads to incidental costs being ignored while computing cost of inventory Followings are the reasons berönd it ? Mazereality bre'n coible shows that it always helps in deciding whethere a transaction Shöeld be recorded by eliminating few entries which can reduce the unnecessary expenses and time. It always emphasizes the items which have al an impact in the financial statement Materiality is more relative. The main objectine of Materiality principle is that all the information used by shareholderes zs enough to take proper Investment deersion in terms of portfolio size. It is also used by the auditors to Cheek accounting Standards arie properly followed ore not in fenancial statements. Incedenzal costs are egnored while calculating cost of inventory . Because expenses of these o cost is more than benefits gained. These practices are not significant in financial statements. As gains from accuracy is mahutamme Less than expenses of computing costs, so basically incidental costs are ignored by the accountants. Hence, incidental costs and add them to get cost. As a result it is inventory computation. considers the total cost more than incidental ignored from cost of