Current accounting treatment for gain contingencies is different from the accounting treatment for loss contingencies. Which accounting concept is this differential concept consistent with?

Question

Quizplus · Accepted Answer

The differential treatment for gain and loss contingencies is consistent with the conservatism accounting concept. This concept suggests that a company should recognize potential losses as soon as possible, but should only recognize potential gains once they are assured. Therefore, the accounting treatment for gain contingencies is more conservative and restrictive than for loss contingencies.

Current Accounting Treatment for Gain Contingencies Is Different from the Accounting