Multiple choice

Gains will not be recognised until earned, losses will be recognised as soon as they are likely

  1. Conservatism

  2. Consistency

  3. Monetary unit

  4. Understandability
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A Correct answer
Explanation

Conservatism (or prudence) ensures that assets and income are not overstated, while liabilities and expenses are not understated. It requires recognizing losses as soon as they are probable.

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