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What Is Conservatism,and Why Is It Important in Accounting

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What is conservatism,and why is it important in accounting?


Definitions:

Equity Method

An accounting technique used by companies to record their investments in other companies, where the investment gives the investor significant influence over the investee, but not control or full ownership.

Additional Paid-in Capital

The excess amount over the par value that shareholders pay when shares are issued, recorded in the equity section of the balance sheet.

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