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Financial doubt

MPR Sanjay Kumar (3118 Points)

24 November 2021

🌟 what is mean by material effect and im material effective give some explanation regarding this with practical

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Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 25 November 2021

It means which has a impact on the Financials of the organization.
for instance If high volume of raw materials is purchased from unregistered persons. it will have a material impact as organization won't be able to claim ITC on purchased and will end up in paying huge tax liability which will have a huge impact on its cash flows.

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MPR Sanjay Kumar (3118 Points)
Replied 25 November 2021

For example : I lost rs 200 means it's not big loss for me(immaterial effect)
I lost rs 50000 means it's a big loss for me so this is material effect....... 200 things affect me that is called material effect. ... am I right

Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 25 November 2021

Yes cash loss does also has material effect to the organization say if there's embezzlement of cash by cashier of Rs.5lacs or while depositing huge cash in bsnk there happens robbery and entire cash is looted by thieves then that's also a loss and has material effect.

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