What is Prudence
Prudence is a concept says that a care must be exercise
while making a judgment or financial estimate by the accountant during the preparation
of financial statement. The accountant is required to make many estimates and
judgment during the preparation of financial statement.
Prudence concept says that asset and expenses are not to be
overstated and income and liability are not to be understated. For example organization
would not continue to include the bad debt in the receivable account because it
will overstate the receivable account.
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