What is the underlying accounting concept that supports no anticipation of profits but provision for...........

General Accounting Principles Concepts of Accounting

What is the underlying accounting concept that supports no anticipation of profits but provision for all possible losses ?

This questions was previously asked in

EPFO AO EO 2021

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Matching

Materiality

Consistency

Conservatism

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Explanation:

The accounting concept that advises against the anticipation of profits while ensuring the provision for all possible losses is known as conservatism. This principle is key to prudent financial reporting, ensuring that financial statements do not overstate income or assets.

- Option 4: Conservatism - This concept supports the philosophy of "anticipate no profit, but provide for all possible losses," ensuring that financial statements remain cautious and realistic. Correct Answer

- Option 1: Matching - Pertains to aligning expenses with associated revenues within a period.

- Option 2: Materiality - Relates to the significance of information affecting decision-making, not specific to profits or losses.

- Option 3: Consistency - Refers to consistently applying accounting methods across periods, not directly related to profits or losses.