The Conservatism Constraint

question 194

Multiple Choice

The conservatism constraint:

• A) Prescribes that when multiple estimates of amounts to be received or paid in the future are equally likely, then the least optimistic amount should be used.
• B) Prescribes that a company use the same accounting methods period after period.
• C) Prescribes that revenues and expenses be reported in the period in which they are earned or incurred.
• D) Prescribes that all items of a material nature be included in financial statements.
• E) Prescribes that all inventory items be reported at full cost.

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