Multiple choice

An Accounting convention which provides that when in doubt, choose the solution which will be least likely to overstate assets and income, is called

  1. Consistency

  2. Materiality

  3. Conservatism

  4. Continuity
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The convention of conservatism (or prudence) dictates that accountants should anticipate no profits but provide for all possible losses, thus avoiding the overstatement of assets and income.

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