Materiality Principle

The Materiality Principle in accounting states that only information significant enough to influence a user's decision needs to be included in financial reports. In other words, if an item or mistake is large or important enough to impact how someone understands a company's financial health, it must be disclosed. Conversely, trivial details that won't affect decisions can be omitted to keep the reports clear and focused. This principle helps ensure financial statements are useful, relevant, and not cluttered with insignificant information.