Conservatism emphasizes the early recognition of losses and delayed recognition of gains.

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Conservatism is an accounting principle that asserts that losses should be recognized as soon as they occur, while gains should not be recognized until they are realized. This approach aims to ensure that financial statements accurately reflect a company's financial position and performance by erring on the side of caution when accounting for uncertain events or circumstances.

Conservatism Emphasizes the Early Recognition of Losses and Delayed Recognition