A company is uncertain whether a complex transaction should be recorded as a gain or loss.Under the conservatism principle,it should choose to treat it as a loss.

Question

Quizplus · Accepted Answer

The conservatism principle states that when there is uncertainty about how to record an item, it should be recorded in a way that will result in the least favorable outcome for the company. In this case, recording the transaction as a loss is the more conservative approach.

A Company Is Uncertain Whether a Complex Transaction Should Be