Question

Select the most appropriate alternatives from those given below and rewrite the statements :

The immediate recognition of loss is supported by principle of ______.
a) Matoning
b) Conservatism
c) Consistency
d) Objective

Answer 1

The immediate recognition of loss is supported by principle of Conservatism.

Explanation:
The conservatism principle states that anticipation should not be made for the incomes and gains but provisions should be made for all the losses and expenses. It is also known as 'Prudence Principle'.

The consistency principle states that accounting principles and methods followed for recording the transactions should remain constant in the future so as to enable the management in comparing the financial position of the business over a period of time.

The objective principle states that all the transactions being recorded in business should be supported by the relevant documents.