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In accounting, the convention of conservatism, also known as the doctrine of prudence, is a policy of anticipating possible future losses but not future gains. It states that when choosing between two solutions, the one that will be least likely to overstate assets and income should be selected.
Conservatism principle: When choosing between two solutions, the one which has the less favorable outcome is the solution which should be chosen (see convention of conservatism) Cost constraint : The benefits of reporting financial information should justify and be greater than the costs imposed on supplying it.
The terms "innovative" or "aggressive" are also sometimes used. Another common synonym is "cooking the books". Creative accounting is oftentimes used in tandem with outright financial fraud (including securities fraud), and lines between the two are blurred. Creative accounting practices have been known since ancient times and appear world-wide ...
A conservative investment style will tend to hold fixed-income investments and may include money-market funds, certificates of deposit, Treasury bonds or high-quality corporate bonds. This ...
In accounting, lower of cost or market (LCM or LOCOM) is a conservative approach to valuing and reporting inventory. Normally, ending inventory is stated at historical cost. However, there are times when the original cost of the ending inventory is greater than the net realizable value, and thus the inventory has lost value.
Moreover, the Conservatism is also a less dominated constraint, which means firms also need to consider more about bad news than good news when reporting financial statements. [18] In particular, firms need to choose the method that "least likely overstates assets and income or understates liabilities and losses" [3] when encountering ...
The Supreme Court beat back several of Biden’s most aggressive unilateral executive actions on the basis of the major questions doctrine, which was anticipated by Scalia’s pronouncement, in a ...
The tech sector is a little more buttoned-down these days, but the distance between big idea and big profit remains considerable, and there is a kind of cultural aspect to it as well, as in ...