The treatment of loss contingencies required in SFAS No. 5 is an example of:

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The treatment of loss contingencies required in SFAS No. 5 is an example of conservatism. This standard requires companies to recognize a loss contingency if it is both probable and the amount can be reasonably estimated. This approach is conservative because it requires companies to recognize potential losses even if they have not yet been realized, in order to avoid overstating their financial position.

The Treatment of Loss Contingencies Required in SFAS No