1. As a business owner, I fail to see why an adjusting entry for insurance is necessary. Why can I not just expense the entire amount when paid and forget about the other months? Would this make a difference if it was a cash-based business rather than accrual?

2. The concept of materiality is one of the most basic principles underlying financial accounting. Why is the materiality of a transaction or an event a matter of professional judgment? What criteria should accountants consider in determining whether a transaction or an event is material? Does the concept of materiality mean that financial statements are not precise, down to the last dollar? Does this concept make financial statements less useful to most users?