wiz-icon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Question

Discuss about the conservatism concept of accounting.

Open in App
Solution

The conservatism principle is the general concept of recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but only recognize revenues and assets when they are assured of being received. It requires that profits should not be recorded until realized but all losses, even those which may have a remote possibility, are to be provided for in the books of account. This approach of providing for the losses but not recognizing the gains until realized is called the conservatism approach.

flag
Suggest Corrections
thumbs-up
0
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
GAAP and Basic Accounting Concepts
ACCOUNTANCY
Watch in App
Join BYJU'S Learning Program
CrossIcon