In Germany, prudence is an accounting principle established in commercial law.What does "prudence" mean in an accounting context?
A)Reliability
B)Comparability
C)Conservatism
D)Relevance

Question

Quizplus · Accepted Answer

Prudence, in an accounting context, refers to the principle of conservatism, which suggests that when in doubt, accountants should choose the accounting method that results in understating assets and overstating liabilities. This bias helps to ensure that financial statements are not overstated in terms of profitability or financial position, which could mislead stakeholders.

In Germany, Prudence Is an Accounting Principle Established in Commercial