Question

As per convention of conservatism, if the accountant is faced with the choice between two methods of valuing _____, the accountant should choose a method which leads to the lesser value.

• A. An asset
• B. A liability
• C. Expenses
• D. Revenue

Answer 1

The correct option is A An asset

The concept of conservatism requires that profits should not to be recorded

until realised but all losses, even those which may have a remote possibility,

are to be provided for in the books of account.