Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 37 - No. 39)
Which accounting principle is most closely related to the concept of conservatism?
The Matching Principle
The Historical Cost Principle
The Full Disclosure Principle
The Prudence (Conservatism) Principle
Explanation
The prudence (conservatism) principle dictates that when faced with uncertainty, accountants should err on the side of caution by recognizing potential losses but not potential gains.
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