The accounting convention which results in the anticipation of losses but not of profits is:
A) prudence (conservatism).
B) matching.
C) going concern.
D) none of the above.

Question

Quizplus · Accepted Answer

The accounting convention of prudence (also known as conservatism) requires accountants to anticipate losses when calculating financial statements, but not to anticipate profits. This convention encourages accountants to take a cautious approach when valuing assets and recognizing revenue, in order to avoid overstating financial performance.

The Accounting Convention Which Results in the Anticipation of Losses