Accounting Dictionary - Letter M
is an accounting concept that measures the importance or significance of accounting data. According to the American Accounting Association (AAA), materiality is defined as: "An item should be regarded as material if there is reason to believe that knowledge of it would influence the decision of informed investor." Materiality is a relative concept, and there are no specific criteria that can be used to determine whether an item is material or not. Instead materiality is subject to professional judgment. Material items should be disclosed in financial statements of an entity.
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