What Is Prudence or Conservatism

question 28

Multiple Choice

What is prudence or conservatism?

• A) Understating assets and net income.
• B) When in doubt, recognizing the option that is least likely to overstate assets and income.
• C) Recognizing the option that is least likely to overstate assets and income.
• D) Recognizing revenue when earned and realized.

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Definitions:

Information Flow

The movement and exchange of information within and between organizations, systems, or processes.

Inventory System

An organized method for managing and controlling the ordering, storage, and use of components that a company will use in the production of the items it will sell as well as the management of the finished products that are for sale.

Understocking

The condition of having insufficient inventory to meet demand, leading to potential lost sales and customer dissatisfaction.

Integrated Supply Chain

A holistic approach to supply chain management that emphasizes the coordination and synchronization of all elements of the supply chain, from raw materials to end customer.