Which one of the following statements best describes the concept of conservatism?
A)Profits should be accelerated in all cases.
B)The measurement of an event is verifiable and reliable.
C)The value of goods and services provided is recognized when earned.
D)When uncertainty exists, understating assets, overstating liabilities, accelerating recognition of losses, and delaying recognition of gains is preferred.

Question

Quizplus · Accepted Answer

The concept of conservatism in accounting suggests that when faced with uncertainty, it's better to be cautious. This means understating assets and overstating liabilities, recognizing losses sooner rather than later, and delaying the recognition of gains. This approach helps ensure that financial statements do not overstate the financial position or performance of an entity.

Which One of the Following Statements Best Describes the Concept