Question: Mustafa Company purchased tools needed to perform services for a customer. The tools cost the company $500 and are expected to have a useful life

Mustafa Company purchased tools needed to perform services for a customer. The tools cost the company $500 and are expected to have a useful life of two years. The owner of the company has decided not to record the purchase at all because, as she states, "It is not a material purchase, so I don't have to include it in my accounting records." Explain to the owner what materiality means and how it is applied in financial reporting.

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