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      Question

      What is the underlying accounting concept that supports

      no anticipation of profits but provision for all possible losses?
      A Matching Correct Answer Incorrect Answer
      B Materiality Correct Answer Incorrect Answer
      C Consistency Correct Answer Incorrect Answer
      D Conservatism Correct Answer Incorrect Answer

      Solution

      The conservatism principle requires that accountants and financial managers should be cautious in their approach to recognizing and reporting financial transactions. It emphasizes that companies should be conservative in their assessment of their financial position and should not anticipate profits until they are realized.

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