When is an accounting error material?

You should determine the materiality of an accounting error based on its relationship to estimated income for the full year and to its effect on the trend of earnings. If an error is material in respect to an interim period, but not to the results of the full fiscal year, then disclose it in the interim period.

Related Topics

Change in accounting estimate
Change in accounting principle
How do I report an error correction?
What is a prior period adjustment? 

Comments

[shameel]

what is the method of booking purchase and sales entry?
meaning if we received bill dt.05.01.12 and the materials for the same received on 07.01.12, Whether i have book the purchase on 05.01.12 or 07.01.12 ?
AND
if i raised the sales bill on 05.01.12 and goods are going to be shipped on 07.01.12, Whether i have book the sales entry on 05.01.12 or 07.01.12

Thanks to educate me and all
Regards,
Shameel

[Steve Bragg]

If you received the bill on the earlier date, you may have an obligation to pay it fairly soon, so it must be recorded in your accounting system at once. At this point, you have neither received nor consumed any goods, so the item is a prepaid expense or a deposit; in either case, it is an asset. It cannot be recorded in inventory yet, since you have not received it. Once you receive it, move the amount of the supplier billing from the prepaid expense or deposit account into the inventory account.

Not sure what you mean by raising the sales bill, but if you ship the goods in July, then you should book the sales entry in the same month.