Which one of the following is violated when a firm measures accounts receivable at its face amount even though knowing some customers may not pay the amounts due?
A)Consistency
B)Conservatism
C)Materiality
D)Revenue recognition criteria

Question

Quizplus · Accepted Answer

The principle of conservatism requires that when there is uncertainty about the amount or timing of future cash flows associated with an accounting item, an accountant should choose the alternative that results in less net income or a lower asset amount. By measuring accounts receivable at its face amount even though knowing some customers may not pay the amounts due, the firm is overstating its accounts receivable balance, which could lead to an overstatement of its net income and assets. Therefore, the principle of conservatism is violated.

Which One of the Following Is Violated When a Firm