This question is about tax accountant skills.

What is conservatism in accounting?

By Zippia Team - Feb. 1, 2023

Accounting conservatism is a principle that requires company accounts to be prepared with caution and high degrees of verification. It is a set of guidelines for bookkeeping that focuses on exercising a high degree of verification so that everything is done correctly and orderly.

When a probable loss is discovered, if someone uses the principle of accounting conservatism, they record their findings. They only record gains when they are fully realized.

This ensures that you are very conservative with your gains and give you lots of leeway for loss as a way to always prepare for the worst and ensure you are ready for that.

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