The concept of materiality is an underlying principle of financial reporting.a. Briefly explain the concept of materiality.b. Is $2,500 a “material” dollar amount? Explain.c. Describe two ways in which the concept of materiality may save accountants’ time and effortin making adjusting entries.

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Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is