Mr. X has a sundry creditors of Rs. 1, 00, 000 creating a reserve for discount @ 2% on sundry creditors. This is a violation of

Creating a reserve for discount on sundry creditors anticipates a future benefit (the discount). The conservatism (prudence) principle states that you should anticipate all losses but NOT anticipate profits. By creating a reserve for a discount that hasn't been taken yet, Mr. X is effectively anticipating a profit/gain, which violates the conservatism principle. The cost principle requires recording at historical cost, and consistency requires uniform treatment over time - neither is violated here.