Materiality
Definition
Materiality is the idea that some amounts are large enough to matter and some are small enough to ignore. A $1 rounding difference does not change the books in a meaningful way.
Example
A bank reconciliation is off by $0.03. The bookkeeper records a small rounding adjustment instead of spending hours looking for three cents.
Why It Matters
Materiality helps bookkeepers use judgment about what to investigate. Not every small difference needs a deep search.