In uncertain circumstances,the conservatism principle guides accountants to
A)accelerate revenue recognition and delay expense recognition.
B)accelerate expense recognition and delay revenue recognition.
C)recognize expense of prepaid items when payment is made.
D)delay both expense recognition and revenue recognition.

Question

Quizplus · Accepted Answer

The conservatism principle directs accountants to choose the option that is least likely to overstate assets and income, and most likely to overstate liabilities and expenses. Therefore, in uncertain circumstances, the accountant should choose to accelerate expense recognition and delay revenue recognition. This is because recognizing expenses now means that the company reflects a lower net income, which is the more conservative approach.

In Uncertain Circumstances,the Conservatism Principle Guides Accountants to