Which of the following is NOT an example of applying conservatism in accounting?
A)Recording contingent losses that are probable.
B)Expensing all research and development costs as they are incurred.
C)Using the lower of cost and net realizable value for inventory accounting.
D)Increasing the useful life used in calculating depreciation.

Question

Quizplus · Accepted Answer

Conservatism in accounting involves a degree of caution in the face of uncertainty, to ensure that assets and income are not overstated, and liabilities and expenses are not understated. Increasing the useful life used in calculating depreciation would result in lower depreciation expense each year, potentially overstating the asset's value and understating expenses, which goes against the principle of conservatism. Choices A, B, and C are examples of applying conservatism.

Which of the Following Is NOT an Example of Applying