Question

What is the general principle of conservatism in accounting?

Q: Answer-What is the general principle of conservatism in accounting?

The general principle of conservatism in accounting is also known as the principle of prudence. It requires accountants to be cautious and avoid overstating assets and income, while recognizing potential losses and liabilities.

A Recognize revenue when earned; recognize expenses when incurred

B Report assets at their current market value.

C Report liabilities at their worst-case scenario value.

D Err on the side of caution by recognizing potential losses before potential gains.

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