Question 6 of 23intermediate💡 UnderstandFill in the Blanks1 mark
The accounting concept that refers to the tendency of accountants to resolve uncertainty and doubt in favor of understating assets and revenues and overstating liabilities and expenses is known as _____.
Correct Answer
Conservatism
Exercise: Test Your Understanding - II | Q: 2 | (Page 11)
For More Understanding
Explanation
The fill-in-the-blank corresponds to the 'Conservatism' concept. The provided text explicitly defines this concept as the tendency to resolve uncertainty by understating assets and revenues while overstating liabilities and expenses. It is also described as the 'policy of playing safe' where all anticipated losses are accounted for, but unrealized gains are ignored.