An accountant is uncertain about the best estimate of an amount for a business transaction. If there are two possible amounts that could be recorded, the amount least likely to overstate assets and earnings is selected. Which of the following qualities is characterized by this action?
A)comparability.
B)conservatism.
C)materiality.
D)neutrality.

Question

Quizplus · Accepted Answer

The action described is an example of conservatism, which is the principle of being cautious and selecting the option that is least likely to overstate assets or earnings. This principle is intended to prevent over-optimistic or overly positive financial statements that could mislead investors or other stakeholders.

An Accountant Is Uncertain About the Best Estimate of an Amount