When Preparing the Financial Statements, the Accountant Must Estimate the Balances

question 151

Short Answer

When preparing the financial statements, the accountant must estimate the balances of certain accounts. When two possible estimates are available and when these estimates are about equally likely, the accountant's prudent reaction is to select the least optimistic estimate in terms of the recorded amounts of assets or income statement accounts. This is referred to as the principle of ____________________.

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Definitions:

Trade Sector

An economic segment that involves the exchange of goods and services across domestic and international boundaries.

Share Of The Economy

Represents the proportion or segment of the economy attributed to specific sectors, businesses, or activities.

Increasing

Describes a situation or quantity that is becoming larger or more in number over time.

Labor Productivity

The measure of economic output per unit input of labor, typically assessed as output per worker or per work hour.