The value of long term investment in shares is subject to wide fluctuations A provision created agai...........

General Accounting Principles Concepts of Accounting

The value of long-term investment in shares is subject to wide fluctuations. A provision created against fluctuation in value of investments is based on the convention of

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conservatism

full disclosure

materiality

consistency

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Explanation:

Creating a provision against the fluctuation in the value of long-term investments in shares is based on the accounting convention of conservatism. This convention advises that uncertainties and potential declines in asset value should be anticipated and recorded, but not increases in the asset's value until they are realized. By creating such a provision, businesses ensure they are prepared for potential losses, thus presenting financial statements that do not overstate the financial position.

Answer: Option 1 - conservatism