Which accounting convention deals with small items like pens, paper, pencils, etc?
Answer & explanation
Correct answer: option 2
The convention of materiality is followed in dealing
with small items like pencils, pens, postage stamps, etc. These items
are treated as expenditure in the year in which they are purchased
even though they are assets in nature. The stationery is valued at cost
and not on the principle of cost or market price, whichever is less.