Match the following terms with the appropriate definition.
-The principle that aims to select the less optimistic estimate when two or more estimates are about equally likely.
A)Gross profit method
B)Inventory turnover
C)Conservatism principle
D)Consistency concept
E)Consignor
F)Consignee
G)Days' sales in inventory
H)Retail inventory method
I)Specific identification method
J)Lower of cost or market

Question

Quizplus · Accepted Answer

The conservatism principle in accounting suggests that when faced with uncertainty or multiple estimates of value, one should choose the option that results in lesser profit or asset valuation. This principle is designed to provide a more cautious and less optimistic view of a company's financial situation, avoiding overstatement of financial health.

Match the Following Terms with the Appropriate Definition