Anticipate no profits and provide for all possible losses. This is essence of which of the following accounting principles:

Question

Quizplus · Accepted Answer

The Conservatism Principle in accounting suggests that potential expenses and liabilities should be recognized immediately, but potential revenues should only be recognized when they are ensured. This principle advises a cautious approach, ensuring that liabilities and losses are accounted for as soon as possible, even if the outcome is uncertain, while gains are only recorded when they are virtually guaranteed. This approach helps in providing a more conservative and potentially less optimistic view of a company's financial condition, aiming to "anticipate no profits and provide for all possible losses."

Anticipate No Profits and Provide for All Possible Losses