Ans:
The materiality concept can affect financial statements in a few different ways. First, companies may choose to disclose certain information if they believe it is material. Second, companies may choose to omit certain information if they believe it is not material. Third, the materiality concept can also affect how financial statements are prepared. For example, suppose a company believes that a certain piece of information is material. In that case, the company may choose to present the information in a certain way to be more understandable.