passwella.
Menu

WAEC Financial Accounting 2017 Question 16

Question 16

Accounting Concepts and Conventions

The prudence concept demands that

  1. A.care is exercised in recognition of profit.
  2. B.loss should not be anticipated.
  3. C.profit should be reported.
  4. D.income should be recognized and disclosed.
Show the answer and explanation

Answer: A (care is exercised in recognition of profit.)

Explanation

Prudence means profits are not counted until realised while all likely losses are provided for: care in recognising profit.