How are small items like pencils, pens, postage stamps, etc., treated in the financial statements of a company?

Treated as expenditure in the year of purchase and valued at cost

Financial statements are prepared following specific accounting conventions to ensure consistency and reliability. One such convention involves valuing inventory at the lower of cost or market price. For balance sheet purposes, assets are valued at cost less depreciation. Additionally, the convention of materiality is applied when dealing with small items like pencils, pens, and postage stamps, treating them as expenditures in the year of purchase despite being assets in nature. Stationery, however, is valued at cost, not based on cost or market price. By adhering to these accounting conventions, financial statements become more comparable, straightforward, and realistic.